Because the number of unpaid bills is rising with the increase in patient copays, coinsurance and deductibles, health systems are looking to stop writing off bad debt and collect.
Patients' out-of-pocket expenses have risen from an average of $2,000 to upwards of $6,000, according to Hackensack Meridian Health in New Jersey.
Hackensack was allowing patients to make time payments that stretched out over 10 and even 20 years, but the bill was written off as bad debt, according to Marilyn Koczan, senior vice president of Revenue Cycle Operations for Hackensack Meridian Health.
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With patients as a primary payer, the health system knew it needed to change standard operating procedure.
About three years ago, Hackensack partnered with ClearBalance on a patient financing program, which pays Hackensack upfront.
ROI on the new system is 500 percent, according to Koczan.
Bad debt, which was 34 to 35 percent on the former lengthy time payments, is now down to single digits of 5 and 6 percent.
Beyond the direct financial results, patient satisfaction has improved, Koczan said. Ninety-three percent of patients have given the hospital a favorable loyalty rating and 95 percent said they would refer family and friends.
HOW IT WORKS
The new approach is in one sense the same, said Tim Mattson, director of Patient Financial Services for Hackensack Meridian Health. Patients are able to stretch out their payments over time.
The difference is that limit is now a maximum of two-years and the time payment bills are no longer written off as bad debt.
"We now have a structured program on loan amounts to payment terms," Mattson said. "We'll ask them the best monthly payment to pay."
The average amount of time is 24 months and average bill is $1,800, which is paid back interest free by the patient.
If after three months there is no payment, the patient is considered to be in default. But if the patient continues to pay for a year, a default is unlikely, Mattson said. Most defaults occur within the first two or three months.
Another benefit is that patients who owe money on the payment system are no longer afraid to come back for care because of an outstanding bill. If a patient has multiple charges from various providers within the system, Hackensack combines the bills into one payment plan.
"We collapsed it into one payment," Mattson said. In this way, he said, "we're enhancing access."
A third benefit is that ClearBalance pays the bill upfront, so the system is not waiting to be paid.
Health systems can no longer spread out patient payments indefinitely. Hackensack accepted this method for years, as long as the patient was paying a little bit each month.
"In the past, we did our own time payments at the hospital," Koczak said. "These days, we need to jump out of our traditional arrangements to something more state-of-the-art."
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