The growth of high-deductible health plans is eliciting mixed feelings among healthcare providers.
Consumers may be more inclined to seek out high-quality, high-value providers since they have to foot a larger portion of their medical costs. However, healthcare organizations are finding it more difficult to collect the full portion of the patient responsibility.
According to one study, 20 percent of working-age Americans with health insurance reported having problems paying medical bills over the course of a year; according to another, nearly 85 percent of patients with bills $500-$1,000 do not pay their hospital bills.
Figures like these are highly problematic for the majority of healthcare providers, who know all too well how consumerism is affecting revenue. With at least one study highlighting the surge in healthcare bankruptcies over the past year, providers need to find new, innovative solutions to reduce their bad debt and collection woes.
Best Practices for Reducing Bad Debt
Getting patients to pay their bills on time seems contrary to increasing their satisfaction levels. But evidence shows that hospitals, ambulatory providers and other healthcare entities can do both simultaneously, while boosting patient engagement.
In fact, organizations with the lowest rates of bad debt employ a variety of best practices and technologies:
Flexible Payment Plans
Consumers are more likely to pay their bills if doing so is convenient. This realization led AnMed Health, one of the largest not-for-profit health systems we work with, to re-evaluate its existing billing and collection processes. Today the organization utilizes a flexible, opt-in patient financing program, which allows patients to customize and manage low or no-interest payment plans and bills online. Patients are also able to change their plan as needed, to create a lower monthly payment amount when they need more flexibility. Since implementing this strategy, the organization has collected more than $1M in patient payments. The system has leveraged patient financing as a means to connect to the community, avoid propensity to pay and other filtering in order to allow plans for everyone who walks into their care network.
Automation and Analytics
A whopping 94 percent of financial leaders in hospitals performing at margins supporting long term viability said they planned 2018 capital expenditures for upgraded technology tools such as RCM dashboards and analytics solutions, as noted by one 2017 RCM survey. By utilizing smart technologies to unearth negative payment trends, organizations can gain greater insight into the behaviors of bad debtors, and more effectively strategize solutions.
You probably wouldn’t order a steak at the Ritz Carlton or reserve a bungalow in an exclusive resort without at least looking at the price. So why would you undergo a complex procedure at a surgical center without having a ballpark estimate on how much it would cost? MGMA’s 2017 study on digital payments revealed 56 percent of patients plan to request a cost estimate in the future — so providers that can deliver on demand will stand out among patients. Training staff to collect payments at the point of care when possible can also reap big benefits: Patients that understand their financial responsibility for a medical service are less likely to be surprised later on – and default on a bill.”
When organizations have too many billing processes at each of their spoke locations, communications and finances can become fragmented and redundant. One large not-for-profit health system we work with credits the creation of a centralized professional billing office (PBO) with helping it establish a revenue integrity program that covered both the hospital and the professional services side of the organization. The health system started to unify billing processes and centralize control early in the pre-live phase, assigning staff specialized functions and consolidating roughly half of the organization’s physician’s billing practices over five months prior to go-live. Extensive preparation yielded impressive results early on, including receipt of 102 percent of cumulative target gross revenue 30 days post go-live (which exceeded its goal).
There is, admittedly, some resistance to implementing new practices, or making changes to the billing when you have an established system. Case in point: In spite of the wide breadth of RCM technology solutions available to medical practices and hospitals, the majority of healthcare providers still send paper bills – 77 percent in spite of patients’ preference for electronic billing (52 percent).
The good news is that change need not happen overnight. An organization can leverage payment-collection changes gradually, for example, by adopting mobile payments technology one month, and training staff to collect payments up front the next month.
In order to coexist in a world of high-deductible health plans, it’s important to meet patients where they’re at, and accommodate their transition to the realities of life with HDHPs. The better a healthcare organization can do this, the happier and more engaged their patients will be going forward.
Mark Spinner is CEO of AccessOne, a patient financing company that helps hospitals and health systems ensure every patient can afford care regardless of financial situation.