by
David Dennis, Contributing Reporter | September 06, 2016
From the September 2016 issue of HealthCare Business News magazine
As Breuer says of his peers across the industry, “Everybody is acutely aware of the self-pay receivable collection issues, and is actively looking for strategies to try and improve it. One answer, we’ve concluded, is that we have to make it far easier for our patients to implement a payment plan.”
Provider-driven solutions
First and foremost, health care providers must acknowledge that they have effectively become finance companies. While other industries have integrated financial planning and payment instruments with their core business, the medical market has resisted this necessary evolution. Perhaps for cultural or moral reasons, where care is seen as a right rather than a commodity, neither patients nor providers have reconciled finances and medicine. The right to care is meaningless, however, without functioning hospitals and clinics to provide it.
Hospital billing systems have traditionally aimed to collect around 10 percent of their annual revenue directly from patients. But because of the shift toward self-pay patterns, the charges providers must bill and collect have risen to as much as 30 percent of annual revenue. According to Breuer, many hospitals are successfully collecting on only half of that amount. To survive in this new context, hospitals and medical centers need to take a page from the automobile and financial services industries and deploy better point-of-service and bill-pay investments that promote the patients’ use of digital self-servicing mechanisms.
The first and most traditional move many hospitals have made is toward outsourcing: many are relying more heavily on third-party collection agencies to track down the dollars. This option greatly increases the cost to collect, however, and is not a sustainable answer to the problem. Better point-of-service collection is the way to collect self-pay more effectively without jeopardizing the relationship with patients. To date, the success of point-of-service execution varies widely. The industry standard can and should be raised.
Success means recognizing that direct payment is the model for meeting this margin and that the culture of communicating this to patients has to be changed. People do tend to think of health care service as a right, so they can become frustrated when faced with confusing arrays of figures, and they often resist paying their balance until their insurance has adjusted their claim. Some might be unable or unwilling to comply.
