The full force of the consumer-directed health movement has not yet hit Duke University Health System, a three-hospital system in North Carolina. But Scott Hawig, divisional CFO of Duke's Patient Revenue Management Organization, sees the first waves of the tsunami, and the health system is being fortified in preparation.

The processes and technology that Duke is putting into place will improve cash flow and collection practices, regardless of how the consumer-directed health movement develops.

Please describe Duke's patient liability. Is it growing?

Hawig:  A fraction of Duke's total annual collections are received directly from patients, but some projections suggest patient out-of-pocket expenditures will double over the next 10 years, so clearly there is a huge bottom-line impact.

The average self-pay patient liability is less than it was a year earlier, but the average patient liability after insurance increased during the same time period. The mix of patients that owe Duke money is changing, and it may be a sign that high-deductible plans and consumer-directed health care are increasing in our market.

A variety of factors can contribute to patient receivables aging over 120 days. For example, we may be having continuing dialogue with the patient, or we are manually reviewing that account to make sure that all prior activity has been processed appropriately, or we are checking to make sure the patient does not have insurance or does not meet our charity care guidelines. If we don't collect money from patients upfront, we exert significant manual effort after the fact.

Another reason some of these accounts are old is that a patient is paying off the balance via a payment plan. There's an administrative cost to that, of course. And we have a problem with bad addresses, where the accounts get old simply because we cannot find the patients.

What staff-related issues are you addressing to prepare for consumer-directed health care?

Hawig:  About two years ago, we performed a labor study of our front-end staff. We had management engineers map out and time the various tasks performed by our registration staff. The goal was to develop a labor standard for our front-end operations so that, if our clinics experience volume changes or we add new clinics, we can better project how to staff that clinic.

An additional benefit of the labor study were the scripting and processing best practices we were able to observe and quantify. For example, some clinics compiled visit documentation for upcoming patient visits the afternoon before the patient arrived, mitigating delays and patient wait lines each morning. We were able to share these best practice scripts and processes across the other clinic locations. 

Additionally, the registration labor standard helps us as we consider new technologies and process changes. To calculate a ROI, we need to know how much a certain process is costing us today, and the labor standard provides that information. For example, business cases for technologies such as remote deposit capture devices, kiosks, and web portal registrations were developed because we understand our labor costs so well.

We have also improved the scripting that our front-end staff use, as well as the pre-arrival communication and check-in signage, to make sure that patients understand our financial policies and the options they have. Our goal is to make sure that patients understand our payment expectations.  

For example, when a patient presents at check-in, our staff can determine whether any money is owed across the hospital and physician providers we serve and there is a script that prompts the staff member to ask for payment.

And we have rolled out a significant amount of training because we think the responsibilities of our front-end staff are ever increasing. We are training on topics like identity theft and payment card industry regulations so our staff members understand some of the new responsibilities associated with collecting payment from patients.

What staff-related issues are you addressing to prepare for consumer-directed health care?

Hawig:  We are using two estimation tools because this technology is still relatively new, and we want to compare the tools in terms of estimation accuracy, integration with our workflow, and ability to provide a global estimate of what the patient will owe both the hospital and physicians. After we evaluate the two, we intend to use a single tool.

If a patient has an estimated liability of more than $350, we call the patient one to three days before the scheduled appointment to inform them of the payment expectation and we ask them if they would like to pay at that time. If the patient balance is estimated to be less than $350, we use an automated call system to notify and request payment.

We also have a web portal that allows patients to schedule and cancel return primary care visits, request appointments for new and specialty visits, advance register, check their account balances, pay by credit card, update insurance information, check lab and radiology test results, and perform several other functions.

What results are you seeing from these technology and process changes?

Hawig:  At this point, we have more than 60,000 accounts established in our web portal, and that is growing by 5,000 to 7,000 accounts a month. More than 11 percent of our web portal log-ins result in payment. That is nearly 3,500 payment transactions a month.

Despite the downturn in our economy last fall, our upfront collections continue to grow, driven by collections on the insured patient's out-of-pocket liability. We believe we are using some effective strategies, including providing an estimate upfront, a web portal that lets people check their balances, and scripting for our front-end staff. 


Interviewed for this article: Scott Hawig is divisional CFO of the Patient Revenue Management Organization at Duke University Health System in Durham, N.C. (scott.hawig@duke.edu)

Publication Date: Monday, September 21, 2009