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On average, hospitals operate on a slim profit margin of 7.2 percent; regulatory changes, the transformation of the traditional revenue cycle, and decreased payer responsibility all squeeze the bottom line and place increased emphasis on capturing patient payments (Selvam, A., “One for the Record Books,” Modern Healthcare, January 2012). Patients have a lower propensity to pay than payers, which puts hospital cash flow in jeopardy. Offering patients a diverse set of payment options will allow them to choose the method that works best for them and reduce barriers to payment.
Collecting payments from payers is not as easy as it once was, and 91 percent of respondents from the 2014 Healthleaders Media Industry Survey said reduced payments was the largest threat they would face this year. ICD-10 will introduce 124,000 new codes driving increased coding complexity and potential denials (Ryan, J., Winkelmann, J., “ICD-10 is Coming—Are You Ready?” American Academy of Orthopaedic Surgeons). For every 1 percent of claims rejected, it can cost an organization $50,000 to $250,000 in annual net revenue (“Denial Management,” PhySource Solutions).
To break that down by claim, it costs an average of $6.50 to file an initial claim, versus $25 to resubmit a rejected claim, so correcting and resubmitting a denied claim costs as much as $37 (Marino, D., “Managing Your Business Through Daily Metrics,” Health Directions, presented at the HFMA South Texas Chapter 2010 Annual Institute).
A shift from traditional PPO plans to high-deductible health plans (HDHP) means providers can no longer rely on payers to take responsibility for the majority of medical bills. Forty-four percent of employers said they would only offer HDHP in 2014, and 87 percent of the people who enrolled in health plans through the health insurance exchanges during the 2014 enrollment period selected either catastrophic, bronze, or silver plans, which have higher deductibles than gold or platinum plans (“Medical Cost Trend: Behind the Numbers 2014, pwc, June 2013; “Marketplace Enrollees by Metal Level,” The Henry J. Kaiser Family Foundation, May 2014).
An increase in patient responsibility brings an increase in nonpayment risk to hospitals, as 45 percent of patients wait more than a month to pay medical bills (Lewis Dolan, P., “Patients Say They Would Pay More Quickly with Online Access,” American Medical News, March 2011). In addition, providers continue to lack viable solutions to manage financial performance holistically (e.g., activity based costing, service line profitability, ability to price risk etc.).
These forces collide to make patient payments more important than ever. Offering a variety of ways to pay will allow patients to pay in the way they feel more comfortable and, theoretically, they will pay faster as a result.
In addition to increasing patient satisfaction, offering patients a variety of ways to pay can also reduce administrative costs. Many of the solutions outlined below are self-serve options that remove administrative staff from the process entirely. Lowering call volume and automating payment acceptance will reduce administrative expenses associated with collecting patient statements. Furthermore, if patients pay faster, their accounts spend fewer days in accounts receivable (A/R), which further accelerates cash flow.
At Point of Service
Revenue capture challenges force hospitals to rely on patient payments as they never have before, which increases nonpayment risk. Providers will benefit from offering patients a variety of choices in how they pay their medical bills. This allows patients to pay in the method they feel most comfortable, which will encourage timely payment and reduce associated administrative costs.
Saleem Tahir is vice president and general manager, Patient Billing & Payment Solutions, Emdeon, Nashville, Tenn.
Publication Date: Tuesday, July 15, 2014
Brian Kueppers, founder and CEO, Apex, discusses the importance of a robust patient payment strategy in boosting organization revenue and enhancing patient satisfaction.
Brian Grazzini, CFO, HealthPort, describes the importance of efficient and compliant information exchange and audit management in helping HIM staff spend less time on paperwork and more on mission-critical projects.
Cindy Matthews, executive vice president, Community Hospital Corporation, discusses how rural and community hospitals can use collaborative partnering to position for success through tough market conditions.
Rick Heise, senior vice president, revenue cycle, at Cerner Corporation, discusses the importance of integrating clinical and financial data to excel in health care’s changing payment environment.
Dale Hockel, senior vice president of operations, and Jim Fanelli, CFO, TriMedx, share strategies for elevating clinical engineering through innovative management programs.
Russ Graney, founder and CEO for Aidin, and John Laursen, head of business development for Aidin, share insights on how to improve care transitions between acute and post-acute care settings and incentivize high-quality patient outcomes.
Scott Elston, strategic accounts manager, GE Healthcare Services, describes how substantial cost reduction in health care requires rethinking business strategy and asset use.
Robert Williams, MD, director, Deloitte Consulting LLP, and Arielle Freiberger, product strategist, ConvergeHEALTH by Deloitte, explain how sophisticated retrospective, real-time, and predictive data analytics can inform decision making to reduce costs and improve care.
Stuart Hanson, director of business development (healthcare solutions) at Citi Retail Services, discusses how improving the payment experience can benefit consumers and healthcare providers.
Scott Schmidt, vice president, Cerner RevWorks, LLC, shares insights on best practices for maximizing a revenue cycle management partnership.
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