MedAssist Founder Retires from Firstsource as Eligibility Outsourcing Market Set to Expand

Michael Shea, one of the pioneers of healthcare revenue cycle management, has announced his retirement from Firstsource Solutions.

The founder of MedAssist Inc., which was bought by Firstsource in 2007, will officially part ways with the company on May 1. Thomas J. Watters, who joined MedAssist in 1999, has been named Firstsource’s president of global healthcare solutions and CEO North America.

Shea, 45, told insideARM that it simply is “time for me to move on and enjoy some other things. I get to spend more time with the family,” he said.

Shea founded MedAssist in Louisville, Kentucky at age 24 after working for an Ohio-based accounts receivables management firm. Although MedAssist offered bad debt collection and insurer services, it specialized in helping health care providers get eligible patients approved for government medical assistance programs, such as Medicaid and Social Security Disability. Shea said he enjoyed the role because he was helping providers secure revenues they otherwise would not likely receive and because he was helping patients better secure their futures.

“There’s a need to capture everyone eligible for government assistance and at the same time, provide a service to the patient. The benefits they (patients) receive help with other bills and allow them to be proactive,” Shea said.

With the help of chief equity partner RoundTable Healthcare Partners, MedAssist grew to employ more than 1,400 people with annual revenues of about $99 million in 2006. The niche and vast client based attracted Mumbai, India-based Firstsource, which was looking to expand its presence in the U.S.

In announcing Shea’s retirement to staff, Firstsource Solutions’ Managing Director & CEO Ananda Mukerji said Shea’s vision of “ bridging the gap” between healthcare delivery and reimbursement, with a focus on patient advocacy, helped pioneer the acceptance of eligibility outsourcing nationally in the US.

“He brought to Firstsource this same dynamism and passion as he led the expansion of the Provider business and looked at innovative ways to synergize our Payer and Provider offerings,” Mukerji said.

Now Watters assumes leadership of Firstsource’s North American operation at a time when health care reform will bring significant changes to medical receivables management and eligibility outsourcing. The recession already has led millions of Americans to apply for and receive Medicaid coverage in 2009. Now that reform mandates are poised to lower the eligibility threshold for medical assistance programs and private insurance, millions more will enroll in Medicaid, Children’s Health Insurance Plans or private insurance plans.

Healthcare spending in the U.S already represents about 17.5 percent of the Gross Domestic Product, or about $2.3 trillion. Government programs, meanwhile, cover about 28 percent of the population. Watters expects health spending to grow as payers and providers look to company with health care reform mandates.

“We believe there will be an increased level of spending as new processes and technologies are initially employed; all of which our existing service array can respond to through outsourcing of these payer and provider functions.” Long term, Watters said Firstsource sees an ongoing need as reform mandates are implemented over the next 10 years and coincide with other initiatives such as implementation of the International Statistical Classification of Disease and Related Health Problems coding system.

Watters said Firstsource also will look to play a role in helping individuals and small businesses find coverage through the health insurance exchanges that will be established under health care reform.

“We are watching very closely how HIE’s are unfolding and absolutely believe we have a role in working with these as they are designed to enroll individuals into insurance programs, whether that be for Medicaid, Medicare or a private insurer,” Watters said. “Because we have been providing these services with demonstrated success for a long time, we believe we are uniquely positioned to respond to the new Reform mandates, on behalf of our clients, in both segments of the industry.”

With billions more in spending at play, new entrants will undoubtedly be tempted to enter the eligibility outsourcing space. But Watters said he doesn’t anticipate that new competitors will be a real threat to Firstsource’s market position because Firstsource has long-standing core competencies in government programs and the company enjoys contractual relationships with over 800 of the approximately 6,000 hospitals in the U.S.

“We have been operating in this space on a National level for many years and thus will represent a significant barrier to entry to these (competitive) attempts,” he said.