Becker's Hospital Review

11 Executive Briefing Sponsored by: Patients Have Enough on Their Minds — Take Confusing Medical Bills Off the Table U .S. healthcare has changed dramatically as patients bear greater costs in the form of high-deductible health plans and larger co-pays. However, hospitals, health systems and independent medical groups have been slow to evolve their approach to self-pay collections from patients who, given their increased financial stake, have greater expectations of customer service. Growth in consumer financial responsibility has been a defining trend in recent years. It is significant that this growth has far outstripped both inflation and wage growth. Consumer out- of-pocket spending rose at six times the rate of wages over the past 16 years, according to Kaiser Family Foundation. For households with limited resources, the simple fact is that growing financial responsibility for out-of-pocket expenses now competes with basic needs, such as mortgage payments, car payments and food. When patients can't afford their medical bills, hospitals and medical groups take the hit. Days in accounts receivable go up, cash flow slows down, bad debt mounts, and hospitals' credit ratings can suffer. The challenge of self-pay collections has become one more burden for hospitals already struggling to reduce operating costs and improve patient outcomes. Finally, self-pay accounts are expensive. The cost to collect self-pay accounts is three times that of commercial insurance accounts, and the longer a self-pay balance goes unpaid, the lower the probability of ever collecting. Elevating efforts to collect past-due medical debts on the back-end is helpful, but not enough to drive the bottom line. Instead, health systems and medical groups see value in using automated tools on the front-end to improve the revenue cycle through patient communication and point-of-service collections. Becker's Hospital Review caught up with Jeff McHugh, senior vice president of sales at Zotec Partners, a provider of revenue cycle management and patient experience solutions for health systems, hospitals, and independent medical groups, about business intelligence tools organizations can use to support self-pay collections and the patient experience. Self-pay collections are still largely retroactive Friction — an aspect of patient financial interactions negatively affecting patient experience — can occur at any point in the payment process, complicating a provider's ability to collect. By far, the most prevalent source of friction is patient confusion about how much he or she owes for services after insurance — and it's easy to see why. Healthcare has been slow to effectively respond to consumer demands for financial convenience and transparency. In 2017, nearly 65 percent of healthcare CFOs and revenue cycle executives offer online cost estimation tools, yet patients' chief frustration is inconsistency and lack of salience in using online estimators to drive healthcare decisions. "If a patient doesn't know they owe money or if they've met their deductible ... then hospitals, health systems, and independent medical groups are already at a disadvantage [to collect] even before services are rendered," Mr. McHugh says. "It's clear many organizations haven't found the best solution to maximize the time they spend [speaking on] the phone with patients or sending out [collection] letters — whatever approach they take to interact with patients." As a result, it is not uncommon for patients arriving on the day of service to be blindsided by a $500 upfront payment. When this happens, patients may not be financially prepared to pay, resulting in canceled appointments or increased likelihood of a patient account being sent to collections. Limited capital for investment purposes are one contributing factor to low digital adoption rates in revenue cycle. "As [health systems] acquire physicians and invest in very expensive information technology and clinical systems, hospitals, health systems, and independent medical groups are trying to maximize [the IT] they've already invested in," Mr. McHugh says. When health entities try to make the most of their IT investments, they may use software patches and manual workarounds to make older legacy systems meet modern business needs. Although this might initially seem like a cost-effective solution, Mr. McHugh has found this approach to be more expensive and resource-intensive than purchasing new technology upfront. This rings especially true in revenue cycle management, where inefficient IT not only contributes to expensive overhead, but can also cause organizations to leave revenue on the table. Rather than purchase technology, a common way healthcare providers have responded to self-pay collections has been to hire additional personnel to bolster revenue cycle infrastructure — mainly registration, coding, billing and collections. However, because of the high cost of labor, Mr. McHugh says this method can be just as financially inefficient.

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