PURSUING OVERDUE BILL PAYMENTS from ordinary people in a severe recession is tantamount to walking through a public relations minefield for healthcare providers. With all the amplified rhetoric in the healthcare reform debate over the high cost of healthcare and how regular citizens are financial victims of a broken system, it’s easy for providers to be cast as the villains.
Yet hard economic times are hitting hospitals and physician practices just as much as anyone else, and collecting unpaid fees is essential to their fiscal health. Bad debts and charity write-offs tend to run around 5 percent of gross revenues, and surveys show an upward trend during the past year. As bad debts increase, hospitals inevitably have to make up for this expense elsewhere, such as through layoffs or purchasing cutbacks.
The trick is to recoup these delinquent dollars without suffering a public relations problem.
Tim Wolters, partner in Springfield, Mo-based BKD Healthcare Group, acknowledges the puzzling paradox.
“Hospitals are in a difficult position with the current economic climate,” he said. “Many have seen patient volumes decrease, as well as deterioration in payer mix. Thus, they are struggling to generate revenues to maintain services. However, they also understand patients are struggling with layoffs and loss of insurance coverage.”
Hospitals try to balance collecting accounts receivable with fulfilling their charitable mission to serve patients in their communities, Wolters said. He sees more organizations revising their charity care policies or offering discounts to patients who don’t have sufficient resources to pay their bills.
“The biggest challenge is to balance margin and mission,” Wolters said. “Hospitals can’t be too aggressive at collecting accounts and risk a public relations backlash – particularly with the healthcare reform discussions ongoing. Yet they must employ reasonable collection efforts to generate enough revenues to sustain their operations.”
Collection dilemma
The disturbing numbers regarding the unemployed, uninsured and underinsured are at the heart of the debt collection quandary. Families USA reports that nearly 87 million – one in three – people under age 65 were uninsured at some point during 2007-08.
The report, based on data from the U.S. Census Bureau and the Agency for Healthcare Research and Quality, shows that most uninsured lacked coverage for lengthy periods of time – nearly 75 percent were uninsured for at least six months, and 60 percent were uninsured for nine months or more. The data in the Families USA report goes beyond the commonly cited 45 million people who are currently uninsured.
“The huge number of people without health coverage is worse than an epidemic,” said Ron Pollack, executive director of Families USA. “At this point, almost everyone in the country has had a family member, neighbor, or friend who was uninsured and that’s why meaningful healthcare reform can no longer be kept on the back burner.”
Consumer ‘advocates’
Demanding payment from an increasingly downtrodden population is an unpleasant but necessary task – yet it can be done with finesse, compassion and determination, said Jay Gonsalves, president of the Action Collection Agency of Boston.
“It’s how to collect the percentage that is collectible,” said Gonsalves, who is also immediate past president of the ACA International trade association. “The intent is to work with consumers to recover the funds most expeditiously, but it varies case by case. Some cases are just misunderstandings.”
While Gonsalves said there are patients who make deliberate attempts to avoid paying their debt, he said his agents take a sensitive approach regardless of circumstances. The key to working with patients, he said, is to serve as their advocate and show empathy for their situation.
“They may need more discipline to keep them on a payment plan and they need to be constantly reminded of their obligation,” Gonsalves said. “We encourage them to face this challenge instead of avoiding it.”
Staying on top of bills in the early stages before they become overdue is the best way for providers to minimize their collections activity, Gonsalves said.
“Providers – especially physicians – have a tendency to procrastinate,” he said. “But it is important not to delay the issue. There are different collection points between pre-admission and post-discharge and collectibility diminishes at each point. That is where the problems are created.”