Bad debt in health care resulted in $65 billion in uncollected revenue last year1—a big share of the $141 billion that all US businesses failed to collect in 2010. Although a percentage of that can be attributed to the 46 million uninsured, this might come as a surprise: At one multihospital health-care facility, balances unpaid after insurance reimbursement, as a segment of bad debt, are growing at a faster rate than the uninsured segment is growing: 30%, compared with 19%.¹
Jerry Peer, vice president of collections for Professional Finance Co (PFC), Greely, Colorado, presented “Point of Service Collections” on June 6, 2011, at the RBMA’s Spring Summit in New Orleans, Louisiana. He takes the position that collections is a critical part of customer service. Not only do patients cite the inability to figure out their portion of the bill as a key reason for not paying bills, but PFC survey data show payment as a percentage of the total amount owed sliding precipitously (to less than 40%) if copayments are not collected before patients leave the premises.
As the voice and face of the radiologist, front- and back-office personnel hold an increasing amount of responsibility for the hospital/practice’s revenue stream. This new reality will have an impact on everything from the type of person health-care leaders hire to how that person is trained.
Changing the Culture
US health-care providers are having a difficult time collecting debt, partially because it is a different type of debt, Peer says. “Patients don’t plan to get sick, so the end result is that payment typically comes out of their discretionary income,” he says.
Another major factor is that patients are operating under old assumptions. Until fairly recently, if patients failed to pay the deductible, the unpaid balance represented a very small portion of the total bill, and providers were unlikely to pursue that revenue. Today, the average deductible for an outpatient visit is $30 to $45, compared with the $10 copayments of years past. Hospital copayments that were formerly $100 have morphed into a typical copayment of $500.
Yet another factor is the entitlement belief: Some patients believe that they are entitled to health care. “We have perpetuated some of this mindset in our own patients, and now we have to guide our patients into this cultural change,” Peer says.
Bringing about a cultural change that will result in stronger point-of-service collections means overcoming concerns about public relations and patient satisfaction—and the feeling that getting paid conflicts with the organization’s mission. The difficulty of estimating a patient’s copayment in advance is no reason to neglect getting a deposit, up front, against what will ultimately be owed. Peer asks, “Apathy sets in after the service is provided, so why not ask for it before the service is provided?”
It’s not all about policies and procedures, Peer advises. A strong point-of-service collections initiative requires tools to facilitate the process and calls for the training of employees in the soft skills of successful collections, and if you do not invest the time in training, Peer predicts, your initiative will fail. “That collections culture has to permeate the organization,” he says, and that includes physicians.
Technical Solutions and Soft Skills
To begin with, health-care providers should offer every payment option in order to satisfy the patient’s preference. These options include debit and credit cards, cards for health savings accounts and health reimbursement accounts, electronic remittances through a kiosk or website, and electronic checks.
This might sound obvious, but providers must make it very clear that they expect to be paid for their services. Communicate payment expectations in every patient interaction (including verbally, at the point of service, by trained personnel), as well as in all written communications and bills. Include information about the patient’s next responsibility, terms, and timing.
Before building a program and training employees, leaders need to establish collection goals and key performance measures. For instance, a goal could be a dollar amount, and employees’ performance could be measured as the percentage of dollars collected, against what is owed.
Many tools exist that support an organization’s point-of-service collections—which is as much about collecting information and increasing the integrity of your data as it is about collecting cash,