A/R days decreased from 70 to 38.
When Mike Simms joined Cone Health as vice president of revenue cycle in 2013, the six-hospital system based in Greensboro, N.C., faced challenges familiar to many health system leaders. The system needed to collect more cash from patients because their out-of-pocket responsibilities had increased, but it was not well-positioned to do so.
In the past, patients could establish long-term payment plans without specific guidelines. Beyond that, the system’s processes for helping patients plan for and pay their medical bills needed updating. Estimates were not given to patients before the time of service, so they did not know their financial responsibilities until they were billed.
In addition, patient statements were difficult to understand, prompting many calls to the customer service department, slow payments, and unacceptably low collections.
In the four years since Simms joined Cone Health, the health system has overhauled its patient engagement strategy—from pre-service contacts to patient payments—and has reaped the following rewards.
Accounts receivable (A/R) days for hospital accounts have fallen from 70 to 38, while A/R days for physician accounts decreased from 69 to 40.
Total cash collections have met or exceeded the system’s goals for three consecutive years.
An improved patient-friendly statement and the ability to pay bills via a web portal have increased patient cash payments by 20 percent and improved patient satisfaction with 94 percent of patients expressing satisfaction with the statement and web portal.
A contract with a recourse payment plan vendor has generated more than $16 million in accelerated payments to the health system with a recourse rate of only 2.26 percent
“In today’s consumer-oriented society, the name of the game is patient engagement,” Simms says. “We owe it to our patients to educate them about their insurance benefits and provide an estimate of their out-of-pocket responsibilities,” Simms says.
Steps to Success
Cone Health implemented many new processes on its route to a successful program for patient payments, including the following steps.
Pre-service improvements. The system created a centralized pre-registration function for scheduled services. Pre-service staff call patients to verify benefits; make sure insurance authorizations are in place; notify patients about their estimated out-of-pocket costs; and ask them to consider paying portions of their payments up front.
Financial counseling, including charity options and payment plans, is also offered before the patients’ appointments. “We are providing education to patients that they haven’t been offered in the past,” he says. “We try to help them get that [out-of-pocket responsibility] paid before the time of service.”
Improved patient statements. Cone Health contracted with a new vendor whose billing statements are easier for patients to understand. The use of color guides readers’ eyes to the most important information on the page and icons highlight the options to pay by telephone or web portal.
Enhanced web portal. The statement vendor also provides a patient-friendly portal that allows patients to see all of their Cone Health bills in one location. The new portal, which is integrated with Cone Health’s electronic health record system, allows patients to pay bills online and allows patients and customer service staff to communicate without telephone calls.
Extended payment plans. Many patients were paying small payments—$5 or $10 a month—toward their balances for years on end, which is not a good business practice. Cone Health instituted a new policy that gives patients six months to pay off their balances before having their accounts transferred to a third-party financing company. That company offers interest-free loans for up to 15 months, at which time interest is charged on outstanding balances.
If patients enrolled in that program have high propensity-to-pay scores and make their first payments as scheduled, the loan vendor advances the entire amount of those patients’ balances to Cone Health, minus a service fee. In the past three years, this practice has translated into nearly $16 million in advance payments to the health system that it otherwise would have been waiting years to collect.
Cone Health originally relied on the revenue cycle team’s experience—Simms has worked in the industry three decades—to identify potential vendors for patient statements and the web portal, but the team wasn’t able to find a suitable partner.
Originally, the team created a list of vendors well-known in the industry, reviewed their websites to identify strengths and weaknesses, and invited five to make formal presentations to the management team. Team members were not excited about their options, prompting Simms to look for other possibilities. He noticed another company—one he had never heard of—on LinkedIn. Simms liked the look of their patient statements, so he invited that company to make a presentation.
“We ran their statements by our patient advisory board to see how they liked them before we went with them, and they loved the idea,” Simms says.
Simms shares the following lessons learned from that process.
Due diligence is essential. The Cone Health team was impressed with one of the original five statement vendors that made presentations—until a team member contacted a nearby health system that was already working with that vendor. “We found out that they were not happy with that vendor because its customer service had declined,” Simms says.
Patient input is essential. Cone Health sought feedback from its patient advisory committee to make sure that vendors’ statements were indeed patient friendly. “If they understand the statement, they are not going to call your customer service department to ask questions,” Simms says. “In fact, if they understand it, they are going to pay the bill faster.”
Consider a short-term contract. Rapidly changing technology—and new entrants in the patient engagement industry—are prompting many improvements to the ways health systems interact with their patients. Because of this, Simms believes provider organizations need to be positioned to switch vendors if a better choice becomes available.
“I would be cautious about signing more than a year or two years with a statement vendor,” he says.
Look for a long-term relationship. Ideally, switching vendors will be unnecessary because the selected vendor will proactively seek to meet its clients’ changing needs. “The only successful relationships we have are when a vendor is a partner,” Simms says. “We don’t call them a vendor; we call them a partner because if they do well, we do well.”
The best way to gauge a vendor’s willingness to act as a partner, adapting to a health system’s evolving preferences, is through conversation, Simms says. Red flag: Vendor representatives who act like they know everything. “If you ask them questions such as, ‘Would you be willing to do this?’ and they push back, you have an idea that they’re not willing to work with you and be a true partner,” Simms says. “And that’s the key.”
For example, Cone Health wants patients to be able to set up payment plans on a self-service basis through its web portal, but its vendor does not offer that feature—yet. “They are working on that because other vendors in the marketplace have that capability,” Simms says. “They are always trying to tweak things to work with us.”
Consider a request for proposal (RFP) process. At the time Cone Health selected its new statement vendor, the health system was operating independently. Since then, Cone Health has entered into a management services agreement with Carolinas HealthCare System (CHS), and Simms now serves as co-chair of the CHS vendor selection committee. CHS uses an RFP process, in which any vendor that meets the health system’s requirements is invited to submit a proposal.
Each proposal is scored based on predetermined criteria and vendors that meet a scoring threshold are invited to make presentations. The presentations are scored and those with the highest scores are invited to make final presentations to the committee before the vendor is selected.
Still To Come
Cone Health’s work is not done yet. One priority is to add new payment options, such as mobile bill pay, and encourage patients to pay their bills online.
“The majority of our patients are still mailing their payments,” Simms says. “We would like to push the needle so that more and more patients pay online, because we get the payment faster that way. And quite frankly, it’s easier and saves postage for the patient.”
In the interest of patient satisfaction, Simms eventually wants to consolidate physician and hospital bills onto single statements. When Cone Health’s electronic health record was implemented in 2012, the health system did not implement the single business office module needed to consolidate bills. Adding it now requires a big investment in information technology support, so the change must wait for resources to be available. “That is in our long-term strategy because it is a very good patient satisfier,” he says.
A Multi-Faceted Program
Cone Health’s journey demonstrates how a multi-faceted patient engagement program can yield significant increases in patient cash payments. The health system implemented new processes to notify patients of their estimated out-of-pocket financial responsibilities for healthcare services up front, introduced extended payment plans, and moved to patient-friendly billing statements and a web portal, each of which contributed to its success.
“Most patients want to pay their bills,” Simms says. “You’ve got to make it easy for them to pay and give them multiple options for payment”
Lola Butcher is a freelance writer and editor based in Missouri.
Interviewed for this article:
Mike Simms is vice president-revenue cycle, Cone Health, Greensboro, N.C., and a member of HFMA’s North Carolina Chapter.