Tower Health will move 675 employees to outside revenue-collection firm Ensemble Health

Tower Health will start using an outside company to work with patients’ insurance companies and to collect payments in a move designed to increase revenue, the Berks County nonprofit said Wednesday.

Tower’s contract with Ensemble Health Partners starts July 1. Under the arrangement, 675 Tower employees are expected to start working for Ensemble. Ensemble, based in Cincinnati, already manages about $30 billion in annual revenue for 300 hospitals and 1,800 physician practices.

Ensemble will start assuming patient registration and the collection of insurance information for Tower. Ensemble will also be responsible for documenting patients’ conditions and sending detailed bills to insurers, in addition to collecting payments and handling disputes with insurers.

Ensemble typically increases patient revenue in the range of 2% to 3% in the first year of a contract, according to an SEC filing in 2021 when it considered an initial public offering.

Tower had $1.7 billion in patient revenue in the year ended June 30. That means that Tower is likely expecting a revenue increase of about $30 million if Ensemble’s results match what it told potential investors it can do for clients.

Health-care industry experts said companies like Ensemble can sometimes do a better job of revenue collection, but there are risks because it is hard to rebuild the process if the relationship with the vendor sours.

Ensemble’s owners include a trio of private-equity firms, Berkshire Partners, Warburg Pincus, and Golden Gate Capital. Golden Gate bought 51% of Ensemble in 2019 for $1.2 billion but is now a minority owner.

Ensemble gets paid an undisclosed percentage of the money it collects.

A couple years after Tower acquired five hospitals from Community Health Systems in 2017 for $423 million, it wrote off $86 million that it had expected to collect from insurers but wasn’t able to.

Tower has since closed or sold three of those hospitals. Tower closed Brandywine and Jennersville Hospitals, and sold Chestnut Hill Hospital.

Tower is anchored by Reading Hospital in West Reading. It also owns St. Christopher’s Hospital for Children in North Philadelphia, and operates hospitals in Phoenixville and Pottstown.

Employees moving to Ensemble will have the same or better pay and will continue working where they work now, Tower said.

Last year, Tower moved 35 information technology workers to an outside vendor.