Patient financial responsibility for healthcare costs accounted for 5% of provider revenue in 2000. Today, that number is 35%, making patients the third largest payer just behind Medicare and Medicaid.1 To be sure, the increase in patient responsibility is challenging for providers as they attempt to collect. But it is also a challenge for patients, especially those on high-deductible health plans or for those without coverage. A recent survey found 64% of patients have delayed or skipped care because of costs.2 When this happens, quality outcomes diminish right along with payer reimbursement. But there are things providers can do to mitigate the potential damage to revenue while helping patients get the care they need.
Unlike traditional payers who have access to the cost of services and member plan detail, patients most often do not. Just as they budget for groceries and utilities, patients need information to help them budget and pay for healthcare costs. But without knowing those costs, doing so can be difficult.
According to a report published by PWC, 60% of patients say they’ve never had a financial conversation with their provider about the price of a procedure.3 A recent provider poll by Change Healthcare supports that statistic. When asked at which stage they were in offering a price transparency tool to patients, 37% of respondents said they hadn’t started and 34% said they were still researching options. Only 29% said they were already offering a tool—somewhat low considering new and impending legislation aimed at improving price transparency and lowering healthcare costs.4
There are simple things all providers can do now to increase transparency and prepare for new mandates.
Having a plan to improve price transparency is just the beginning. To truly improve patient collections, you need to develop a collections process that focuses on each patient’s unique financial situation and preferences—one that mimics a retail experience. And that process should begin no later than the time of service. According to a recent poll by Change Healthcare, 58% of providers still collect the majority of patient responsibility after service is delivered. This approach was fine when patients owed nothing more than a small co-pay. Unless providers adopt a more patient-centric strategy, they risk damaging both their bottom line and patient satisfaction.
Providers have a 70% chance of collecting patient payments when done prior to or at the point of service, but just a 30% chance of collecting after discharge.6
An effective patient collections strategy should include the following:
Every healthcare organization is different and there is no one-size-fit-all model for patient collections. Providers need to continually review what’s working and what could work better. The place to begin is to determine which areas are most concerning for your organization. A poll by Change Healthcare asked providers which areas of collections did they find most challenging. Fifty-two percent said getting paid faster was most challenging; 24% said integrated patient communications; and 16% said driving patient satisfaction.
Following are four guideposts that will help you identify areas in most need of attention. They can also help you as you monitor progress toward your goals.
Providers are continually being asked to do more with less. Whether you’re a large hospital or a small provider practice, it can be challenging to find the resources to pull together and implement an effective patient collections strategy. Partnering with industry experts is a great way to help streamline the process and achieve your goals faster. But it’s important to choose a vendor steeped in the healthcare industry. There are many healthcare startups run by smart people trying to get into our growing industry. They may have a good product but do they have the vast experience required to truly understand the challenges providers face, including regulatory requirements, complex revenue cycle processes, or value-based care mandates?
Partnerships are about more than a product or service. They’re about continual innovation and working side-by-side with providers as the industry changes to meet new challenges as they arise. Following are a few guidelines for choosing a partner. The best vendors should be able to:
A great clinical experience can be completely offset by a negative financial experience. Why does this matter? Because, according to a recent hospital study, patients who are satisfied with the billing process are more likely to recommend the provider (82%), more likely to pay their bills in full (95%), and more likely to return to the same provider for care in the future (74%).8 Partnering with industry experts can help providers improve price transparency, elevate the patient financial experience, and achieve their collections goals faster and more effectively.
1 Michael Evans, "What We Can All Do About Rising Healthcare Costs," Forbes, June 28, 2017
2 Sara Heath, "64% of Patients Avoid Care Due to High Patient Healthcare Costs," Patient Engagement HIT, February 15, 2018
3 "Top Health Industry Issues of 2016," PWC, December 2015
4 "Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans," [Press Release], HHS.gov, November 15, 2019
5 Terry Reinsager, "Why You Should Offer Patient Payment Estimates in Advance of Care," MediRevv, April 13, 2017
6 Academy of Healthcare Revenue
7 Brooke Murphy, "5 patient payment trends affecting payers, providers in 2016," Becker's Hospital Review, June 22, 2016
8 Kelly Gooch, "Study: Satisfied patients more likely to pay medical bills in full," Becker's Hospital Review, March 16, 2016