Patient bad debt is becoming a serious threat to profitability at healthcare organizations nationwide, representing an estimated $65 billion in uncollected revenues in 2010. And, while self-pay patients do account for some of this debt, insured patients who neglect to pay balances after the payer pays its portion represent the fastest growing segment of individuals with outstanding medical bills.
So what steps can healthcare providers take to increase patient collections in light of these changing dynamics?
In an era where patients act more like consumers, it only makes sense for healthcare organizations to explore how they can operate more like a retail establishment. By adopting payment strategies that are routine in other industries, hospitals and physician practices can increase patient collections and minimize the time and expense associated with capturing outstanding balances. A number of leading-edge healthcare organizations have already embraced this retail-based approach to patient billing, which focuses on a handful of basic tenets.
Set clear expectations. Until recently, many providers were unable to calculate a patient’s out-of-pocket financial responsibility until after the insurance company paid the claim. With the industry moving toward real-time claims adjudication, a growing number of organizations now have the capability to generate an accurate estimate of the patient’s portion of the bill. By sharing this information with patients in advance of procedures and giving them online access to their financial information, providers can minimize misunderstandings and increase the likelihood that patients will pay when procedures are complete.
Pre-authorize payments. Most consumers are familiar with the process of pre-authorizing charges for a hotel stay, and this is a policy that can be easily applied in a healthcare setting. In fact, a recent survey conducted by Buzzback Research shows that at least half of respondents would be willing to pre-authorize payment for medical services if offered an incentive, such as a discount at a hospital gift shop or a room upgrade during a hospital stay. Giving patients the option to pre-approve a credit card charge either online during pre-registration or at a kiosk during check-in further streamlines the process for providers while eliminating billing hassles for consumers.
Collect at the time of service. It goes without saying that providers have a much greater chance of receiving payment from patients before they leave the office. Unfortunately, many front-office staff members are uncomfortable requesting co-payments and outstanding balances from patients, making collections both awkward and inconsistent. Utilizing check-in kiosks to facilitate the capture of patient revenues can help providers overcome this challenge. Between ATMs, airline kiosks and self-checkout at the grocery store, self-service has become virtually commonplace in everyday life, and patients are now at a point where they expect the same from their healthcare providers. Beyond driving revenue, an automated check-in process can also help address operational inefficiencies and increase the accuracy of patient data used to file insurance claims.
Offer flexible payment options. Today’s consumers want choices, and patients are no different. By offering a variety of payment options, providers can increase the chances that patients will fulfill their financial obligations. Flexible arrangements, such as recurring payment plans, provide a predictable revenue stream for the organization without the time and expense related to fielding billing inquiries, processing verbal payments or managing paper statements. The resulting increase in credit card transaction volume also gives healthcare organizations a negotiating tool with merchant services providers, allowing them to minimize transaction expenses.
Focus on convenience. Whether reviewing medical bills online or making payments via a mobile device, consumers desire the ability to personalize when, where and how they manage their healthcare experience based on their individual preference and location. Providers that cater to this need will boost patient satisfaction and cash flow. Plus, by communicating with patients in a way that is most meaningful to them, providers can build loyalty and establish a competitive advantage. For example, organizations that give patients the option to receive appointment reminders as text messages to a mobile phone − much like an airline sends flight status information can both extend on-the-go convenience to patients and reduce the amount of revenue lost to missed appointments.
In today’s increasingly complex healthcare landscape, providers must adopt strategies to better engage consumers as a matter of financial survival. With a retail-based approach to patient billing, healthcare organizations will be better equipped to meet the growing consumer demand for greater convenience.
Options like pre-authorization, check-in kiosks, online bill pay applications and recurring payment plans all present an opportunity to capitalize on the success of these tactics in other industries. With more transparent, consumer-friendly billing processes in place, hospitals and physician practices can mitigate the impact of patient bad debt, optimize operational efficiency and improve cash flow.
Jeff Kao is general manager for NCR Healthcare.