Hospital Revenue Cycle Dilemma – Self-pay Cash Collections

by Phil C. Solomon on September 13, 2012

in Collecting self pay deductibles and co pays

The Growing Self-Pay Collection Epidemic

There are growing financial pressures for healthcare organizations to collect cash for services rendered. For patients who can afford health insurance coverage, they have been forced to take on a greater portion of the responsibility to pay out of pocket for their healthcare services. Increasing deductibles and increased co-pays now burden patients with additional expense, unlike any time in our country’s’ history. Due to the high cost of healthcare insurance, many consumers are not able to afford coverage at all. That said hospitals are now experiencing a meteoric rise in their self-pay financial class.

The U.S. Census Bureau reports in 2000, 36 million people were uninsured, and in 2010, that number rose to 49.9 million. There is a direct correlation between unemployment and our uninsured population. During that same period, the portion of the population with job-based health insurance dropped from 65.1 percent to 55.3 percent while the overall population grew from 279.5 million in 2000 to 306.1 million in 2010. When we experience a down economy, more patients become uninsured or under insured. Collecting self-pay payments from patients is going to get more difficult in the future. Hospitals must adjust their collection strategy accordingly.

How can revenue cycle executives collect more cash from self-pay patients?
A good payment collection strategy begins with the first interaction between the patient and the provider. For self-pay accounts, healthcare providers must develop a systematic collection workflow and stick to it. When patients have outstanding bills, they should be contacted early and often in the revenue cycle. The message sent out to the community must mirror the hospital’s policy to pursue collections for those who do not pay. A poorly executed collection strategy actually trains patients “not to pay their bills.

Today, consumers are very savvy. If they do not have the financial resources to pay their bill, they will seek out the provider who is less likely to pursue collections.

Some of the common collection mistakes hospitals make are:
* Delivering a confusing, non-patient friendly bill
* Not collecting payment at the time of service
* The inability to “risk score” their self-pay patients
* Not leveraging available technology to identify charity qualified patients and wasting valuable collection resources attempting to collect from them
* Having insufficient contact with self-pay patients who have outstanding bills
* Holding unpaid accounts too long before placing them with a third party collection agency

What can hospitals do to improve self-pay cash collections?

* Use the latest technology to validate patient information such as financial responsibility service estimates, propensity of payment likelihood, charity qualification, demographic verification, and insurance eligibility
* Develop a segmented propensity of payment collection work flow internally or leverage scoring tools with a qualified early out vendor
* Inform patients of all payment options well before service is provided
* Retrain your staff to ask for cash from patients at every opportunity
* Proactively offer payment plans to patients who have high-deductible insurance coverage
* Install ATM’s in strategic locations of the hospital such as the Emergency Room

For more information about how to optimize self-pay collections and improve revenue cycle performance, contact Phil C. Solomon at 404-849-8065 or phil@philcsolomon.com. To stay updated on the latest revenue cycle topics, follow me on Twitter @philcsolomon

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