Billing dispute lands in hospital’s favor but teaches medical industry a valuable lesson

The health care sector can learn from the Hackensack dispute.

Those tasked with processing payments can only expect do so if the payor account is actually billed, and if a billing department suffers from disorganization or inefficient processes, ensuring the bill goes out may prove to be difficult.

In the case of Hackensack, New Jersey, it wasn't the hospital that failed to send the bill. In fact, the Hackensack University Medical Center found itself in the middle of a billing dispute because it never received an invoice to pay. A 2008 agreement stated that the medical center would pay $176,000 to the city for crossing guard services, a deal that was attached to the city's construction of a cancer center and parking garage. However, that amount went unpaid for years, until the matter was finally resolved this past week. 

At first, many pointed to a lack of organization in the hospital's accounting department, but that turned out not to be the case. According to the North Jersey Record, the hospital never received the bill and wasn't aware it owed its debt.

"We never received any sort of billing inquiry, but the second the city did [submit one] we turned it around quite quickly," Jose Lozano, chief of staff for hospital chief executive officer Robert Garrett, told the news source earlier this week. 

The quick turnaround supported the hospital's claim, but the Hackensack University Medical Center's biggest support came from Deputy Mayor Kathy Canestrino, who stated the city should be blamed.

"We had never billed them," she said. "It's not the hospital's fault. It's our responsibility." 

A lack of proper recordkeeping has been linked to the cause of the misunderstanding. Several factors, including a lack of understanding of each individual's role in the city office, led to the problem. Today, the city is vowing to tighten its billing and recordkeeping responsibilities to ensure something like this doesn't happen again. 

While it's nice for a hospital to find itself on the opposite end of one of these situations, it does teach the health care sector a valuable lesson. Failure to bill a patient or insurance agency can result in a bevy of issues. If such an incident stems from a lack of departmental organization, those problems must be fixed immediately. 

As was the case with the city office, billing departments can also suffer when roles are not properly defined. If no one knows who is responsible for billing a payor, it's likely the bill will never go out. Often, this confusion is caused by events at the office like staff turnover. While that is difficult to prevent, the potential for an incident can be greatly reduced if the organization works with a third party accounting provider. 

Low-balance third party accounts must be collected, even if they aren't a high priority. If they aren't billed, these balances can linger and cause long-term damage down the road. Working with a third party provider will allow departments to leave this work to a professional team that can identify and track the status of each account, greatly reducing the risk of a bill not being sent.