Chalk it up to the rise of high-deductible plans or decreasing payer reimbursements, but the numbers don’t lie: patients are footing more of their healthcare bills and hospitals are struggling to collect.
In fact, a recent TripleTree report revealed there has been a 69 percent increase in consumer payments due to providers over the past four years. That same report also noted providers collect only 1/3 of patient balances larger than $200, with the balance being sent to collections or written off as bad debt.
All this to say … collections can make or break a hospital. So, how are hospitals compromising on their collections game?
Let us count the ways:
1. They treat all patients the same.
Some patients may be able to cover all their care costs up front, while others need to spread out payments, or perhaps get help from a lender or charity. Logical, right? But for some reason, many hospitals take a one-size-fits-all-approach to their collections work. They’ll simply submit the bill, wait for payment and see what happens. If payment fails to come in after repeated attempts, they send the account to collections, and the agency often takes a similar approach.
Scoring and segmenting patient accounts based on who has the propensity to pay –and directing them to the in-house or outsourced team most likely to collect – is a much more productive collections strategy.
Even better, providers should try to determine what patients owe before a procedure, and reveal payment plan options from the start. By developing a means to estimate the cost of a patient’s care, providers can deliver a figure to target for pre-operative, pre-procedure collection.
2. They lack an agency strategy.
Just as hospitals can take one-size-fits-all approach with their patient collections, so too can be the case with their collections agencies. Some hospitals find themselves struggling with how to reconcile accounts placed with their agencies. Others are unhappy with their early- or late-stage collections vendor, but can’t quite pinpoint where it’s all going wrong.
Advocate Aurora Healthcare, an operation with 27 hospitals and 500 outpatient locations, was trying to oversee 20 different collections agencies just a few years ago. They wanted to reduce the number of agencies doing their collections work, and gain a clearer understanding of who was performing best, but they lacked the data insights to evaluate. By tapping into a collections optimization platform, Advocate Aurora was able to reduce their agencies from 20 to four, and they started seeing double-digit increases in their patient collections.
Routing accounts to the optimal collections resources, and using collection agencies judiciously, minimized their collection costs, and helped them stay focused on patients who can and will pay.
3. They rely on limited data sources.
To create a truly effective collections strategy that is both predictive and insightful, hospitals need to rely on data sources that offer breadth and depth.
Let’s consider an example. In the credit world, financial services companies can be looking at two consumers with identical credit scores and come to the conclusion that they should treat each the same. But with more data insights, a lender might see that one is trending up, making on-time payments that exceed the minimum balance, and the other is trending down, showing signs of payment distress. With historical data and other insights, the financial lender would likely treat each of those individuals differently. Agree?
The same scenario can unfold in the healthcare space. If providers are solely looking at zip code data, or historical healthcare data, they will be challenged to offer personalized payment plans and decisions around how best to collect. Combining various data sources, including credit data, can provide hospitals with deeper insights into a patient’s propensity to pay and financial disposition. This allows healthcare organizations to identify the best financial pathway for each patient at, or before, the time of service, and will ultimately optimize their account receivable performance as well.
By flipping the switch on a few of these strategies, hospitals can turn their patient collections game around. They’ll see gains in patient satisfaction, improvement in the accounts receivable bucket and the power data can have on segmentation. There’s really no excuse to fail.