A Bird in the Hand: Getting a Grip on Collections
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, Peer says. If you do not collect this information, someone else will have to: addresses, phone numbers, occupations, and employers. Best practices in the industry currently call for updating this information quarterly. There are vendors available to help by doing online medical scoring, automated charity-discount determinations, and address verification. Medical reimbursement is a challenge for providers to understand, so imagine what it must look like to patients. Employees will need a command of all aspects of insurance reimbursement and the ability to explain reimbursement to patients in terms that they will understand (in addition to having the necessary tools and services at their disposal). The soft skills necessary for medical collections include engaging the patient through smiling, maintaining eye contact, and using the patient’s name; speaking with confidence using positive terms; being empathetic, but objective; and never, ever arguing with a patient. “You may win the argument, but you will most assuredly lose a patient in the process,” Peer advises. The Eight-Step Method Peer recommends taking eight steps designed to heighten the patient’s awareness of a delinquent bill. The method is not a script, but a process, and Peer always begins with this when he trains employees in point-of-service collections. He recommends a call-preparation step in which the employee reviews past call records and payment history, and prepares questions. First, identify the customer to make sure that you are speaking to the responsible person (usually the patient, but sometimes a relative). A key step in identifying the customer is asking for phone-number and address verification. Second, identify yourself and your employer, once you are confident that you are speaking to the right person. Third, in preparation for requesting the outstanding balance, let the customer know that you are calling to discuss the statement recently mailed to him or her. Ask the customer if he or she has any questions about the statement and what it was for, listen, and respond to those questions. Then, state the outstanding balance and ask the customer how he or she would like to pay. Fourth, pause: This pause will influence the customer to take a turn in the conversation and respond. Resist the temptation to fill the silence that is likely to follow as the customer considers a response. Fifth, determine the reason for the delinquency. The caller knows that the account is delinquent, so the objective is to collaborate with the patient in getting to a zero balance. If the patient has no money, offer to take a credit-card number. If there is no credit card, explain your payment policies, including deposits, monthly payments, and interest terms. It is very important for the caller to be attentive and to be prepared to respond to questions about third-party payments and other issues raised in conjunction with nonpayment, as this step precedes negotiation for payment. “If you are collaborating, you will get to the desired outcome,” Peer says. Sixth, negotiate: The most important thing to know is that negotiations need not be confrontational, and that the employee’s attitude will set the tone for the negotiation. Barriers to a successful negotiation include trying to win at all costs, becoming emotional, not trying to understand, and inveighing blame in any way. Seventh, close: The primary goals of this phase are to conclude with a clear understanding of the next step; to present options for payment or agree on a date by which the customer will get back to you with specified information; and to thank the customer. Eighth, update the file. Any individual who picks up that file needs to know what is going on when the patient shows up for service—perhaps as soon as the next day. All payment agreements must be documented and entered into your system. It is important to have a one-page printed document for the patient that explains payment options and policies, to be distributed at the point of service. Patients can easily be distracted at the time of a procedure, so burying your policy in a longer document practically ensures that the patient will not understand the policy before he or she receives the service.