Leadership & Professional Development

Racial disparities in business processes can exacerbate financial barriers to healthcare: What leaders should know

October 13, 2020 9:37 pm

Joseph J. Fifer

  • Hospital and health system leaders should consider how health inequity issues in their patient populations may affect some patients financially.
  • Leaders should go through their organization’s patient financial experience as a patient would, with an eye toward identifying any areas that could be impacted by inequity.
  • Hard questions to ask include whether patients are treated equally, regardless of race, in processes such as financial assistance and collections.

After reflecting on the racial unrest throughout the country this summer, I wrote a message to the HFMA membership, Board and staff, urging everyone to pause and learn about the impact of racism on the people of our nation — and, perhaps most important, to care about it. Now it’s time to start getting specific about what else we, as healthcare leaders, can do, particularly about health inequity issues related to business operations.

Acknowledging racial disparities in healthcare

It’s common knowledge that there are racial disparities in healthcare. Whether it’s life expectancy, pregnancy-related mortality rates, the incidence of certain chronic conditions or COVID-19, Blacks fare worse than whites in the U.S.

Among many underlying causes of these disparities is access to health insurance. Black people are twice as likely to be uninsured as white people, which can pose a significant financial barrier to care. Black unemployment rates are generally higher than those for whites, which continues to be the case during the COVID-19 pandemic, as shown by July data. Furthermore, the average net worth of a Black family in 2016 was only about one-tenth that of a white family, which affects ability to pay for insurance cost-sharing and unexpected medical expenses.

In the long term, reducing racial inequities in access to healthcare likely will require policy solutions. But in the short term, health system leaders can take steps to reduce racial disparities in access to care at the organizational level.

Understanding the patient financial experience

I have often said that for CFOs, there is no substitute for going through their organization’s patient financial experience as a patient would. When considering the benefits of engaging in this process, I usually think of insights on patient convenience and the ease of obtaining information about prices and patient financial responsibility.

But there is another lens through which to view this experience: Equity. Ask your finance leaders to walk you through the entire financial experience, from the initial patient engagement and education on the front end to the collection efforts on the back end. In particular, familiarize yourself with your hospital’s eligibility criteria for financial assistance (i.e., free or reduced-fee care) and the application process.

You should also become conversant with your hospital’s policies on extraordinary collection actions (ECAs), which may include credit bureau reporting, liens, garnishment or lawsuits — that is, if your hospital, through its business affiliates, uses any ECAs.

Asking the hard questions

Once you know the process, you can identify the areas where inequities potentially are a risk. For example, when it comes to financial assistance, are all patients given the same opportunities, regardless of race? Is financial counseling made available to all? If a hospital uses ECAs, are such actions being taken without regard to race?

Before you take offense at such insinuations, consider this: No matter how well-designed your hospital’s policies and procedures may be, and no matter how much progress has been made in eliminating overt discrimination, hospitals and their business affiliates are staffed by human beings. And humans have implicit biases.

Throughout the patient financial experience, with its numerous touchpoints, there are many decisions, large and small, in which implicit bias could tip the scales the wrong way, toward unequal treatment. For public-facing staff, thorough anti-racism training that addresses implicit bias can be an important way to raise awareness. In my home state of Michigan, the governor recently signed an executive directive recognizing racism as a public health crisis and requiring implicit-bias training for all state employees, joining several other states that have done so.

As a healthcare leader who wants to make a difference, your challenges are to be open to the idea that implicit bias exists in your organization, to be willing to ask hard questions and to be tenacious enough to go beyond easy answers. Throughout the process, maintaining an organizational culture of respect, trust and a shared vision will be paramount.

Easy? Not at all. But identifying and working toward elimination of inequities — whatever the basis, not just racial — should be an integral part of contemporary leadership roles. Learning and caring about racial equity is the place to start.


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