Curbing Patient Financial Risk Early Helps Protect Your Bottom Line


To decrease uncompensated care, limit the risk of bad debt, and increase collections among self-pay patient accounts, hospital leaders should start asking for payment early.

Whitepaper | Donna Reddy
VP - Financial Clearance, Change Healthcare

Donna has 30+ years of healthcare revenue cycle experience and is responsible for product management and operations for Change Healthcare’s Financial Clearance Services business.

As the healthcare industry transitions to value-based reimbursement, patients are more financially responsible for their health. As part of this increased responsibility, today’s consumers want providers to deliver more retail-like experiences—and they are willing to shop around until they find the best value. They also want providers to help them better understand their healthcare expenses and options. Yet right now, an overwhelming majority of patients are underwhelmed with the financial education providers share.

The average deductible for consumers now stands at $1644, up sharply from $826 a decade ago.1


A national research study of payer, provider, and consumer activities conducted by ORC International and commissioned by Change Healthcare found only a fifth of consumers thought their experience with providers improved, and about the same thought things were worse.

Rising healthcare consumerism and increasing market consolidations are making it more important than ever for providers to take charge of their patient referral leakage by focusing on patient satisfaction.

One way to increase patient satisfaction is to improve the financial journey. Focusing on the patient’s first encounters with the provider via pre-service and point-of-service initiatives, such as eligibility and enrollment, is the first step.

Shifting Financial Responsibilities Increase Bad Debt Risks

As high-deductible health plan (HDHP) adoption increases, patients who grew accustomed to paying a co-pay at the time of service with their insurance paying most of the final bill post-service, are trying to adjust to a new arrangement—one where the patient owes more upfront.

It’s now common for hospitals to see patients with annual deductibles anywhere from $2,000 to $10,000.2This increase in financial responsibility comes at a time when the average American’s finances are already stretched, and most are deprioritizing medical expenses.

As patients bear more financial responsibility for their care, providers that don’t take steps to address the consumerism trend are likely to experience a rise in bad debt, putting their bottom line at risk.

Improve Collections Through Patient Education, Eligibility, and Enrollment

Hospitals and health systems that do everything feasible to facilitate patients’ abilities to pay more upfront are more likely to offset a rise in bad debt. Providers can decrease the risks of uncompensated care and bad debt by implementing strategies to help proactively collect from patients prior to care delivery. Today’s hospital and health system leaders are focusing on three strategic priorities to help decrease uncompensated care, limit the risk of bad debt, and increase collections, while improving satisfaction for both patients and staff.

The Academy of Healthcare Revenue estimates providers have a 70% chance of collecting patient responsibility either prior to or at the point of service, compared to a 30% chance after discharge.3

Three Ways to Reduce Uncompensated Care

1. Uncover funding sources for self-pay patients

Hospitals and health systems that have a large patient population eligible for government-funded programs are strategically focused on identifying coverage for self-pay patients and supporting enrollment in the right program. Doing this helps facilities reduce their uncompensated care, while preserving their commitment to serving their community members.

Facilities can improve eligibility and enrollment services by leveraging a combination of state-of-the-art technology and onsite professionals. Assisting patients in submitting applications and enrolling them across a multitude of programs such as Medicaid, Medicare, commercial insurance, state and federal disability, victims of crime, charity care and state/local programs increases patient satisfaction and reduces out-of-pocket expenses.

2. Optimize reimbursement for accidentrelated claims

Numerous hospitals and health systems treat a high number of patients in the Emergency Department (ED) who are involved in automobile accidents or sustain work-related injuries. Patients are often responsible for a large percentage of the ED visit bill due to deductibles, copayments, and co-insurance requirements. Many don’t know whether their automobile insurance or workers’ compensation carrier will cover some or all the expenses that would otherwise be paid out-of-pocket.

Additionally, workers’ compensation claims can improve hospital finances because they have a higher reimbursement rate than even commercial insurance. A recent study found two-thirds of workers’ compensation hospital outpatient payments related to common surgeries were higher than those paid by group health. The workers’ compensation and group health difference for a common shoulder surgery exceeded $2,000.4

Hospitals and health systems that employ patient liaisons to gather complete thirdparty insurance information at the point of service and educate patients about their benefits can decrease accounts receivable aging and improve patient satisfaction by reducing out-of-pocket expenses.

3. Educate patients on financial options

As HDHP adoption increases, more hospitals and health systems are prioritizing the need to engage and educate their commercial payer patients about their benefits, the billing process, and how to best meet their financial obligations.

Instead of relying on internal staff already stretched too thin, many hospitals and health systems use a highly-trained, focused group to provide financial counseling both pre-service and at the point-of-service. These individuals focus exclusively on patient screenings, benefits education, and upfront collections. Performing these functions in a caring, professional way helps patients understand and appreciate all coverage options that can reduce their out-of-pocket expenses.

Although any one of these tactics can improve patient satisfaction and increase revenue, providers reap the most benefits by incorporating all of them. When performed together, they help providers reduce patient responsibility volumes and limit the back-end efforts needed to collect patient responsibilities after discharge.

Outsource for Optimization

Understanding and accommodating patients’ educational and financial needs prior to or at the point-of-service requires significant effort and specific skills that many hospitals and health systems struggle to perform in-house.

Some hospitals and health systems choose to outsource eligibility and enrollment services to professionals experienced with federal, state, local and social programs as well as commercial insurance and government regulations, who can also provide superior customer service. Providers that choose to outsource these functions can use internal resources the way they intended—to care for patients.

Providers that deliver exceptional experiences at the beginning stages of the patient journey are more likely to decrease their risk of bad debt. Having the right people and solutions in place pre-service and point-of-service increases the number of opportunities to improve the patient experience, identify reimbursement sources, and increase patient collections upfront—all of which keeps a hospital’s bottom line healthy and its reputation positive.

Financial Clearance Services

Change Healthcare provides comprehensive financial clearance services to help hospitals and health systems optimize revenue by guiding patients through the complexities of paying for medical care:

  • With Eligibility & Enrollment Services, our on-site professionals are trained to proactively identify and enroll self-pay patients in government funding sources at the federal, state, and local level to secure payment for accounts that could otherwise result in uncompensated care.
  • Our Third-Party Coverage services help optimize reimbursement for all accident related claims including motor vehicle accident (MVA) and workers’ compensation.
  • In addition, our on-site Financial Counseling services educate patients on their financial options to help increase collections.

1. 2020 Kaiser Foundation Employer Health Benefits Survey,

2. The Engagement Gap: Healthcare Consumer Engagement in 2017, ORC International and Change Healthcare.

3. Academy for Healthcare Revenue, 2014

4. “Comparing Workers’ Compensation and General Healthcare Costs: Compensable Care Incurs Higher Fees,” /2013/06/28/comparing-workers-compensation-and-general-healthcarecosts-compensable-care-incurs-higher-fees.aspx

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