How to Lower Patient Collection Expenses

Self-payment collection has been an increasing concern among health care providers for the last several years. And it's not shocking, considering it's caused a huge dent in their bottom lines due to unpaid balances.

"Bad debt due to unpaid bills accounted for a default rate as high as 30 percent or more."

For example, back in 2009, bad debt due to unpaid bills accounted for a default rate as high as 30 percent or more. Mailing statements cost firms around 60 cents a letter, when considering the cost of postage. She even explained that a reminder phone call cost providers about $5 in staff time.

Since then, it's extremely likely that these numbers have all increased or at least stayed consistent. And it's easy to see why when we consider that practices and their patients have largely operated in the same way since then.

David Brooks, vice president of marketing, communications and public relations at MNet Financial, noted that providers today usually receive only 0.45 cents on the dollar from patients for services.

While there are many reasons patients simply aren't paying, let's delve into a few. This will help us answer the question: How can health care providers lower the total cost to collect payments?

The first is deductibles, which Brooks noted has increased a whopping 255 percent since 2006. Families are simply under too much pressure to pay these increasingly large deductibles upfront. Brooks says there "has to be a better way," and there is, which we'll explain a bit later.

"Health plans with high deductibles and HSA accounts have helped drive the patient experience from a more traditional encounter to more of a customer-based experience in today's marketplace" said MNet Health Services CEO David Hamilton, according to Brooks. "That's why it's so important to be addressing patient's need for convenience and ease-of-use as a component of the patient interaction."

Other reasons, reported by Grace, include basic excuses from patients (they lost the check) to more realistic ones like they thought insurance would cover their expenses. Susan Morse, associate editor for Healthcare Finance News, also said that claim errors are a big problem, and are costing the health care industry billions of dollars.

"What the payer wants from the provider is a clean claim," said Bruce Hallowell, managing director in the health care practice at Navigant Consulting, according to Healthcare Finance News. "If I submit a clean claim, I'll get paid in five days."

Hallowell's comment, of course, could (and likely does) describe how patients feel. The easier it is to read a bill, the more likely patients will pay on time. If they find it difficult to comprehend their bill, they're probably more likely to hold off paying.

So now let's get to the all-important question: How can hospitals and other healthcare providers reduce their payment collection practices? Here are four ways: 

Build trust with patients

Brooks suggested that providers must build trust with customers. He explained, however, that trust isn't just built by quality service but throughout the entire process, from making an appointment to bill paying.

Be transparent with patients

If providers don't already have one, they need to create a policy that thoroughly describes their payment collection practices. And they must clearly communicate this policy with their patients.

If patients have a problem with this policy, providers need to work with them to resolve outstanding debt. One way to do so is to offer an alternative payment method.

Offer alternative payment methods

Yes, we understand upfront payments are the gold-standard practices in today's health care industry. But health care providers need to also understand that this payment method simply isn't reasonable for some people.

While we don't suggest that providers completely abandon their self-payment collection processes, we do believe it's in their favor to offer payment plans to patients who are struggling financially. Not only will being flexible build trust with patients, as we noted in the previous segment, but providers are also more likely to get paid on time and lower the amount of money and effort they spend trying to reduce aged receivables reports.

"Providers can cut expenses by taking paper, ink and envelops out of the occasion."

Move to online payment structures and reminders

Providers can significantly cut expenses by simply taking paper, ink and envelops out of the equation. It may be difficult (and time-consuming) at first to transition many patients into an online bill-paying or reminder program, but doing so will save providers money in the long run.

Online bill pay can include the option to pay manually or have the company automatically pull payments from bank accounts with permission. Reminders can take the form of email or text alerts.

At the minimum, emails should detail exactly what the patient owes and how and where to pay it. It should also confirm that their insurance and personal information is on record and up to date.

A text alert should be short remind patients about upcoming bills, unpaid balances and when payments have been successfully processed.

Cutting payment costs is a multi-dimensional process that takes time to implement. If you need further assistance, we suggest talking to a professional consultant who can help take the stress of you firm by ensuring processes flow more efficiently.