Becker's ASC Review

31 Executive Briefing Sponsored by: Why the 'old school' approach to collections is no longer viable for ASCs In collaboration with BHG Patient Lending P atients are responsible for a greater portion of their healthcare bills than they were two decades ago, and many can't afford their out-of-pocket costs or high deductibles, leaving providers in the lurch. "Over $485 billion in patient responsibility is billed every year by medical providers across the country, and according to industry stats, only about 45 percent of that is collected," said Tyler Crawford, CEO of BHG Patient Lending and chief business development officer at Bankers Healthcare Group, BHG Patient Lending's parent company, citing a report by the Kaiser Family Foundation. With 55 percent of medical expenses going uncollected, it's evident that healthcare wasn't ready for the significant increase in uninsured patients and high-deductible plans that's occurred over the past decade, Mr. Crawford said during an interview with Becker's ASC Review. Rise of already unaffordable patient expenses From 2006 to 2015, the amount consumers with employer- sponsored health insurance had to pay for healthcare before their insurance kicked in increased by 255 percent, according to a Kaiser Family Foundation employee health benefits survey, which entailed interviews with nearly 2,000 employers in early 2015. That jump was followed by a 29.4 percent average increase in patients' deductible and out-of-pocket maximum costs from 2015 to 2017, according to a Black Book survey of 2,698 providers and 850 healthcare consumers. Patients' financial responsibility — and the popularity of self-pay plans — will only continue to rise, Mr. Crawford predicted. That's concerning given the results of a survey released by the Federal Reserve in 2018, which suggest 40 percent of Americans would struggle to pay a $400 emergency bill. "There are a number of patients who are being billed upwards of $1,000 to $2,000 by surgery centers," Mr. Crawford said. "Therefore, they need payment options." Downfalls of current patient financing models Despite the major portion of bills going uncollected, as many as 36 percent of providers never discuss financial obligations with patients prior to delivering care, according to West Corp.'s 2017 survey of over 230 providers. Some ASCs are still going about collections as they always have. This "old-school" approach, as Mr. Crawford called it, involves minimal help for the healthcare consumer. An ASC will accept patients, determine their insurance coverage and try to collect via manual processes before tapping a collections agency. This hands-off approach overlooks the need for billing transparency. Seventy percent of consumers reported being confused by medical bills and 87 percent of consumers want to know their financial responsibility early on, according to a 2018 report from InstaMed. "The patient isn't being educated upfront on their payment options and bills go unpaid. As a result, providers are relying on sending a paper statement, a reminder, or a collection call for people to start paying," Mr. Crawford said. "I think that's the way of the past. And it's why we're in the current situation with uncollected balances." Mr. Crawford's sentiment is supported by industry research. For example, Black Book's 2017 Revenue Cycle Management report found providers' "profit margins continue to be impacted negatively by traditional collection solutions," which leave them with millions of dollars in unpaid medical bills. Another way ASCs fall short when it comes to collections is relying too heavily on in-house payment plans, according to Mr. Crawford. While a step in the right direction, in- house plans are not always the best options for ASCs, he said. In-house payment plans consume significant administrative resources, relying on staff to manage the plans and follow up with patients. The success of an in- house financing solution also hinges on having the right technology to help patients pay in increments. But even with effective tools in place, centers build up their accounts receivable while waiting for funds to come in. One of InstaMed's survey findings underscored the issue: 77 percent of providers said it takes more than a month to collect any payment. "In-house payment plans can restrict the cash flow of a center and hurt them from a financial standpoint," Mr. Crawford said. Some facilities avoid the problems associated with in- house payment plans or traditional collections processes by offering card-based financing options. While these services entice patients with an introductory promotion period, they often then jump to "astronomical" interest rates as high as the mid-20s, Mr. Crawford said. If a patient is confused and doesn't pay off a balance inside the

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