Virtual Care and Digital Health: Beyond COVID Response
The Tegria Blog Aug 11, 2021
Is one dollar today better than one dollar 120 days from now? We think so. Actually, we know so, because each day that a patient account lives on in A/R the likelihood for reimbursement or patient payment decreases. How as a provider can you overcome this losing proposition?
Patients are putting off medical payments. Employers are opting for high deductible health plans. These trends and others have significantly increased out-of-pocket expenses for medical bills. Large employers project that health care costs per employee will surpass $14,000 in 2018. This 5% increase over 2017 translates to employees covering an average of $4,400 or 30% of their own medical care costs.
Offering prompt pay discounts at point of service is a path to ensuring your organization is strategically addressing the changing landscape of patient receivables and creating a win-win for your patients and your bottom line.
Look at the bigger picture
The patient experience is a top priority for healthcare organizations today, but the financial aspect of running a business cannot be overlooked. It is a balancing act. Patient satisfaction can’t be sacrificed by ruthless efforts to collect on outstanding bills. Advisory Board’s research on point-of-service collections shows that once a patient’s out-of-pocket expense grows to $5,000, there’s only a 36% chance of collecting any money at all. It boils down to perception. A large medical bill or even the perception of a high dollar amount owed can feel overwhelming and many patients even put off seeking treatment to avoid paying a high price. Unfortunately, the high price comes either way, as those who put off care could find themselves in an emergent situation down the road. This cycle is far from an ideal model for healthcare.
Consider your ROI and cost to collect
Think about the actual cost to collect as a bill makes its way around the revenue cycle. If a patient owes $100 from the outset, would you offer them $20 off and collect $80 if they pay promptly? Or perhaps a 10% discount if paid in full? You’re getting $80 today, and that $80 is worth more today than it will be tomorrow.
Conversely, if payment is not obtained upfront, factor in the cost of your patient pay representatives’ time to call the patient (maybe three times), the cost of printing and mailing multiple statements, the cost of transferring the account to collections, and the recovery percentage that the agency would take as their cut. With medical bills in bad debt continuing to grow, it makes more sense to offer a discount and get the payment upfront.
Put your patient experience hat on
75% of healthcare systems that practice point-of-service collections ask for payment at the time of services rendered — a good thing. However, some organizations have policies dictating care will not be provided until payment is received. For patients, this practice is unpopular. For providers, it highly depends on the type of medical services that the organization offers. A good bet is to manage known uncollectible receivables sooner. Segment your patient population and implement a presumptive charity program to complement your patient discount program. This is a proactive approach to identify accounts that will not yield ROI as an outcome of front- and back-end revenue cycle efforts.
Nothing ruins the patient experience faster than a warning call that an account is headed to bad debt, or even worse, a call from a threatening collector demanding payment. Cycling accounts to bad debt means paying a premium for recovery. And, it very well may be creating long-term dissatisfaction among your patients who won’t remember the great care they received from the doctor — they’ll only remember that the provider sent their account to bad debt.
Ask for the payment upfront
According to Advisory Board research, only 14% of consumers understand basic medical/insurance terminology. Providers must educate the patient at every interaction regarding his/her financial responsibility. Before clinical care even commences, there are already several patient touchpoints to educate the patient on the balance and arrange payment options. Scheduling, appointment check-ins, and provider interactions represent critical opportunities to continue an open dialogue with the patient about addressing balances due. Keep the conversation going; let the patient know your organization cares about not only their health well-being but also their financial well-being.
Offer an incentive for payment upfront like a prompt pay or paid in full discount
The industry shift to get patients in the mindset to pay upfront is a slow one. The Advisory Board conducted research showing that 44% of hospitals currently offer a prompt pay discount, which means that 56% do not. A 20% discount is standard. Forward-thinking organizations even send a pre-encounter statement. It looks like a patient statement but is sent in advance of the visit. The pre-bill identifies each aspect of billing, shows the total patient obligation, explains each change, and includes personalized notes for each patient’s unique circumstance.
The Bottom Line
When confronted with unexpected medical costs, patients are facing tough choices. Offering prompt pay discounts in advance of care is one tactic that is gaining traction among hospitals and physician groups alike. It offsets burgeoning costs to manage out-of-pocket responsibility and creates a better balance between consumer satisfaction and your organization’s need to run a viable business.
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