Bad debt is a problem bedeviling many healthcare institutions during these bleak economic times, as the volume of uninsured - and underinsured - patients increases.
Jerry Smith, vice president of revenue cycle at St. Vincent's Health System in Birmingham, Ala., will speak directly to this concern on Tuesday at HFMA's ANI 2009 conference in Seattle.
Smith is leading an education session titled "Cash Management Alternatives: The Impact of Upfront Loan Programs on Cash and Bad Debt." He says upfront loans are a "third option" available to help patients resolve their payment responsibilities to providers.
"[Loan programs] are an option that has proven to be a source of patient satisfaction and ongoing loyalty to healthcare providers," Smith said.
Smith will explain upfront loans in the context of St. Vincent's purchase of Eastern Health Systems. St. Vincent's revenue cycle team served as consultants to EHS prior to the purchase in order to help increase net patient revenue and reduce bad debt.
While EHS made changes in both leadership and vendors, Smith's team realized that EHS had to provide their patients with an additional payment option to accelerate cash flow and resolve A/R issues.
The answer was a financing program that offered patients 100 percent funding of their total loans upfront. Patients paid 1 percent of their principal balance, plus any interest and fees, or $10 per month, whichever was greater.
Smith said the program reduced bad debt write-offs and days in A/R, as well as gave patients the opportunity to create good credit histories. And an important by-product of the program was that it helped hospital public relations by allowing patients to resolve their hospital debts.
No healthcare finance executive can afford to overlook the importance of such a combination in this economic climate.