Changes in health insurance are shifting the way healthcare organizations are being paid. Historically, little attention has been given to patient payments within healthcare; the focus has always been on properly managing and processing payer reimbursement. Today, with some estimates putting patient financial responsibility as high as 30 or 35 percent, healthcare organizations should put patients at the center of their revenue cycle strategies, affording organizations a stronger, healthier revenue cycle and a better overall experience for its patients.
At Grinnell Regional Medical Center, a 49-bed community medical center in Grinnell, Iowa, we’ve prioritized a more consumer-centric approach to patient payments to successfully address these changes. From experience, most patients want to pay their bills and are far more likely to do so when there is a basis of trust in the relationship. To that end, business processes and partnerships that engage patients, create personalized touch points and foster consumer trust are critical.
Indeed, optimizing patient payment rates requires a strong, customer-centric focus. Before looking directly at patients, hospitals might want to examine the financial experience they’re providing them: Is it truly consumer-focused?
Different business approaches
As most healthcare financial managers are aware, the business processes for seeking reimbursement from payers and patients are fundamentally different. While the workflows for billing patients are largely manual at many hospitals, for instance, most payer billing processes are optimized for efficiency with the goal being “touching” the least amount of claims by increasing the clean claim rate. Obviously, patients are not claims and simply sending a bill accurately is not enough to properly engage them in their financial experience.
Further complicating the picture with respect to patient payments is the uncertainty of making revenue forecasts based on them. While revenue from traditional payers such as Medicare or contracted insurance companies can be projected rather easily, payments that are the responsibility of patients are much more difficult as each patient, in a small way, represents a unique contract that depends on two major factors: willingness to pay and ability to pay. Large variations may exist in patients’ willingness and ability to pay, regardless of their insurance coverage. Therefore, it is difficult to quantify a patient’s likelihood to pay which can greatly impact revenue success.
Nevertheless, insurance companies are not the only revenue source for a hospital – patients are bringing in much of the business through the doors. At a time when patients increasingly are becoming healthcare “consumers,” healthcare organizations must improve their ability to efficiently and effectively process patient payments and transform financial interactions with patients from being just a transaction to serving as the end of a great overall care experience.
By providing patients with multiple payment options, consumer-friendly technology to manage and pay their healthcare costs and some other simple, proactive steps, healthcare organizations can improve the overall patient experience while simultaneously maximizing patient payments and protecting their bottom lines. Additionally, proper patient payment technology can help increase operational workflow, allowing staff more time to focus on the patient and their care.
The Golden Rule: A good basis for a patient payment strategy
A good patient payment strategy is conceptually straightforward and essentially comes down to the “golden rule” – treating patients as you would want to be treated. For example, at GRMC, we provide consumers with a range of choices to make payments, such as in person, by mail, electronically online or via mobile technology, and by cash, credit or debit card. Doing so allows them to pay in a way that is most convenient for them, improving their satisfaction and the hospital’s likelihood of receiving payment. GRMC also provides adjusted payment arrangement guidelines for individuals who qualify for financial assistance. This strategy allows our patients to pay their bills in a timeframe that fits their financial capacity, all the while saving the hospital from unneeded collection fees.
[Also: Revenue cycle takes back seat]
Another effective strategy we offer at GRMC is to make resources available at every point throughout the care continuum to help answer patients’ questions about their bills. Patients are becoming increasingly responsible for larger portions of their healthcare bills; thus, they will need more resources to help them understand their financial obligations. According to America’s Health Insurance Plans, for example, “out-of-pocket payments for insured patients are expected to grow from $250 billion in 2009 to $420 billion by 2015, a 68 percent increase." To address this, all bills should clearly explain the charges patients are responsible for and patients should have access to helpful advice at any time. If financial aid is available, it should be offered proactively.
While sending bills to collections or writing off bad debt might clean up the accounts receivable within the balance sheet, helping patients with their bills will prove more productive in the long run from both a revenue and patient satisfaction standpoint. By establishing relationships and developing a patient-focused payment process at GRMC, for example, our community hospital has decreased self-pay receivables from about $3 million to under $2 million, without increasing bad debt write-offs. And, this is all while patient out of pocket expenses are rising.
Finally, organizational leaders should consider existing processes and partners involved in the payment experience. Seeking out partners that offer a range of technologies and services that provide ease of use for the patient and visibility into all patient revenue for the hospital can be especially effective.
Focus on patients strengthens the bottom line
Many of today’s hospitals are struggling with cash flow; as much as 10 percent of their cash comes from patient payments. Taking a proactive, consumer-focused approach to optimizing patient payments through easy to use technology, rather than just focusing solely on payer reimbursements, can quickly generate a positive impact and make a major difference. In this new era of the healthcare consumer, providing patient-friendly tools, resources and proactive processes supported by a customer-centric philosophy can – and will – deliver bottom line results.
Kyle Wilcox is assistant vice president of finance at Grinnell Regional Medical Center.