Healthcare expenses continue to be a major financial burden for Americans. In fact, according to the Consumer Reports Index for July, 16 percent of Americans were unable to afford medical bills or medications and 9 percent have lost or reduced healthcare coverage.
The uninsured issue has been well documented, but the under-insured population may actually be the elephant in the room. While 32 million Americans will soon have some form of healthcare insurance based on the American Recovery and Reinvestment Act (ARRA), will that insurance coverage actually alleviate the consumer debt issues for patients and healthcare providers?
Macroeconomic factors resulting from the Great Recession have changed the financial landscape for America. Fundamentally, providing healthcare coverage for the uninsured is a good thing, but the type of coverage may be problematic. Unless behavioral patterns by healthcare providers and patients change dramatically, covering more Americans will only exacerbate the healthcare debt crisis.
Based on the estimates, approximately half of uninsured Americans will be enrolled in Medicaid, which has historically had a low patient responsibility amount. Covering those individuals will pose the typical problems associated with low reimbursement rates. The other half, and countless others looking to lower their premium expenses, will likely gravitate to limited benefit plans with high deductibles or patient responsibility amounts. Increasing a patient’s financial responsibility does not bode well in our current economic climate.
In today’s market, healthcare providers are ill-equipped to handle the imminent shift in revenue mix from third-party payers to patient liabilities. Complex technology systems and processes have been designed to capture revenue from insurance companies, not individuals. Without planning for and addressing the self-pay collection processes, healthcare providers are likely to see additional revenue leakage and an increase in bad debt expense.
Americans view healthcare as a right. Historically, having healthcare insurance meant that someone else was responsible for paying the bill. As healthcare insurance plans have evolved, a significant portion of the financial responsibility has been shifted to the individual. This trend is likely to continue, but the individual liabilities will increase exponentially due to legislation requiring all individuals to have some form of health insurance.
Shifting behavioral patterns is not an easy task. Education and communication between healthcare providers and patients will be the key to success. Technology solutions aimed at improving the self-pay collections process are developing rapidly. In order to address the throughput problem and minimize revenue leakage, leading healthcare providers must not only implement technology solutions, but also educate employees and redesign processes.
A cornerstone to developing a comprehensive approach for self-pay collection processes is transparency. Healthcare providers must provide patients with the information necessary to understand their financial obligations prior to, at the point of and after services have been rendered. Publishing prices for common procedures, estimating patient liabilities at the point of service and designing a robust patient assistance program will not only improve collections, but also improve patient satisfaction.
At the end of the day, healthcare providers must be equally concerned with their margin as well as their mission. The stark truth remains – without margin, there can be no mission. Navigating the changes in the healthcare industry is and will continue to be a daunting task for both healthcare providers and their patients. Unless behavioral patterns change, communication improves and technology enabled processes are implemented, healthcare debt will have a dramatic impact on all constituents.
James Bohnsack is vice president of TransUnion Healthcare.