With the shift in more insurance plans to High Deductible Health Plans with larger deductibles and higher Out-Of-Pocket amounts, patient financial responsibility is accounting for a greater portion of net healthcare revenue. Additionally, with declining reimbursements, many practitioners have moved to provide more niche and specialty services that are generally private pay. These factors, combined with rising costs and more aggressive coding standards, make monitoring and optimizing collection procedures now matter more than ever. Practices need to develop a strong patient collection strategy in response to these changes in order to sustain their success.
Education of Staff
Most staff can easily communicate their specific specialty, but many still fall short in understanding the basics of the revenue cycle for practices. By educating the staff on how the revenue cycle works they will feel more at ease in talking to patients about their financial responsibility at all points of service. A general primer should be held annually for all staff that helps to explain key principles on patient responsibility, such as deductibles, co-pays, out of pocket and the patient’s overall financial responsibility. During this education, it should be emphasized to staff the importance of collection of these payments and communicating what the practices overall strategies and procedures are for the collection of payment.
Communication with Patients
As noted above, once your staff is educated on the basics of patient responsibility, they will feel more comfortable communicating this point with patients. Staff should look to start a courteous and professional conversation with patients from the point of scheduling and prior to the provision of care by providers. Many patients find medical service fees to be confusing and will appreciate the transparency upfront regarding potential fees due. Setting expectations early in the process and consistent communication of these expectations will make patients feel more at ease with their responsibility.
This goes together with the communication with patients. After communicating fees and expectations to the patient, it is important for practices to focus on collection. The best time for these patient fee collections will be at the point of service. Many patients are apprehensive in a provider’s office, with their concerns (and hopefully the providers) being their health and welfare. It should be stressed to all staff that payment should ideally occur prior to service, such as at check-in.
In addition to optimizing when payment for patient responsibility is collected, it is also important that practices have a variety of payment options. These should include cash, checks and credit cards on site, as well as having an option for installment plans. These payment plans are best served via a third-party vendor or solution to assist in the management, collection and underwriting of these plans. While these solutions may have a fee, the alternative of stalled or non-existent collections is far worse.
Many practices are turning to different industry models and new technologies in order to help with these collections. Electronic statements are becoming more popular, allowing the practice to send a statement to the patient (if the collection was not done upfront) aftercare is provided and allows for automated reminders of the balance due. The electronic systems also give patients more detailed records of their care that they can access at any time, and this sense of empowerment can often help with collections. Practices with re-occurring patients also have found that keeping payment details on file (such as credit cards) improve collections as they allow the practice to charge patients automatically for services provided.
Develop and Monitor Collection Key Performance Indicators (KPIs)
Using KPIs to help monitor collections can help practices, owners and administrators on judging the effectiveness of patient collections, if their plan is working and if the plan requires more communication or education. Some common KPIs for collection include Days Receivables Outstanding and Adjusted Collection Rate.
Like it or not, the old models of healthcare reimbursement are being phased out, even beyond the changes from fee-for-service to more value-based models. In the past, third party payors accounted for nearly all revenue of a practice, however, there has been a noticeable change in patient responsibility in plans in the past 10 years. One study found that practices saw an 88 percent increase in revenue from patient payments between 2012 and 2017. With the source of the revenue collections changing, your practice needs to have a strong patient collection strategy for continued success.
Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.