CHICAGO – Approximately three in four respondents to a survey of healthcare organizations said the recession has negatively impacted their balance sheets more than the 2001 recession.
Completed in February by the Chicago-based credit agency TransUnion, the survey represents 46 healthcare organizations and operations in all 50 states.
According to the survey, 96 percent said their healthcare organization is experiencing a rise in the uninsured/underinsured patient population. More than 41 percent of healthcare administrators said that increase is the most important issue facing their organization.
Other issues ranked as the most important included an inefficient collection process at the front-end and back-end of the revenue cycle (17 percent), a multitude of financial assistance programs and rules (15 percent), higher co-pays and deductibles (13 percent) and more regulatory scrutiny (13 percent).
“Our survey reinforced the fact that hospitals and other healthcare-related offices are in search of ways to manage their rising debt caused by the increasing uninsured population, changing healthcare plans and the realities of greater out-of-pocket payment liabilities for patients," said Milton Silva-Craig, executive vice president of TransUnion’s healthcare business unit.
According to Silva-Craig, the weighted average of a consumer becoming 90 or more days delinquent on any credit obligation is at an all-time high in the United States. TransUnion’s Credit Risk Index, a statistic developed to measure the changes in consumer credit risk, has elevated more than twice as much in the current recession as compared to 2001.
“What this means for healthcare organizations is that it is more important than ever to develop strategies to effectively manage the collection of receivables from self-pay patients," said Silva-Craig.
The Credit Risk Index increased from 118.38 at the end of 2007 (the beginning of the latest recession) to 129.67 at the conclusion of 2009 (the latest data available) – a 9.54 percent increase.
Between the first quarter of 2001 (the beginning of the last recession) and the fourth quarter of 2001 (the recession ended in November of that year), the Credit Risk Index only increased 4.34 percent, from 109.77 to 114.53.
“Though the Credit Risk Index is showing signs of finally beginning to level off, it is important to understand that consumers are more than 18 percent riskier today than they were at the beginning of the 2001 recession, a condition that is filtering down into many different industries, including healthcare," said Chet Wiermanski, global chief scientist at TransUnion.
The survey also revealed that 83 percent of respondents have seen self-pay patient populations at their healthcare organizations increasing in the last 12 months. The remainder of the respondents say this population remains about the same.
Approximately two-thirds (65 percent) of survey respondents indicated their healthcare organization has a bad debt percentage of between 1 percent and 5 percent. About 23 percent of respondents indicated they have bad debt percentages of between 5.1 percent and 10 percent.
Decreasing bad debt was found to be the No. 1 objective by survey respondents. Nearly 35 percent of respondents rate this as their most important objective, followed by increasing collections at the time of service and post discharge (26 percent) and improving operational efficiencies (20 percent).
