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Small percentage of uninsured patients generate most of hospitals' self-pay revenue

If hospitals aren't optimizing their revenue cycle, they could potentially be leaving millions of dollars on the table.

Jeff Lagasse, Associate Editor

Upwards of 30 percent of self-pay accounts -- those patients without health insurance or those who have a patient balance after insurance -- will generate more than 80 percent of the self-pay revenue collected by hospitals, finds a new TransUnion Healthcare analysis.

Which means that, if hospitals aren't optimizing their revenue cycle, they could potentially be leaving millions of dollars on the table.

TransUnion released this information as part of a healthcare insurance discovery campaign.

IMPACT

The findings are significant because the number of patients without health insurance increased to more than 12 percent at the end of 2017. And patient balances after insurance, or PBAI, have been steadily rising, increasing from 8 percent of the total bill responsibility in the first quarter of 2012, to 12.2 percent during the same period in 2017.

Following years of decline since the Affordable Care Act was passed in 2010, the uninsured rate grew from 10.9 percent in the fourth quarter of 2016 to 12.2 percent in the fourth quarter of 2017.

As a result, hospitals are taking a much closer look at cost control measures. But they still may be missing the most important part of the picture: an optimized revenue cycle which ensures earned revenue becomes paid revenue.

This presents a clear opportunity for hospitals to obtain revenue from accounts that are most likely to be paid in full. More opportunities may exist on such accounts, since up to 5 percent of self-pay accounts that are written off as bad debt actually have billable insurance coverage.

WHAT ELSE YOU SHOULD KNOW

While some hospitals are improving their profitability via cost cutting, the research also shows that optimizing revenue cycle procedures may be of even greater benefit. In 2018, cutting costs was the highest priority for 63 percent of hospital C-suite executives.

Yet a recent Advisory Board study indicates that the typical 350-bed hospital may be leaving $22 million on the table by focusing on cutting costs over optimizing their revenue cycle.

THE TREND

Provider executives are projecting more moderate revenue cycle IT budget growth and continued electronic health record optimization and consumer self-pay challenges, a November HFMA/Navigant survey showed.

While providers appear better prepared to address consumer self-pay, 81 percent still believe the increase in consumer responsibility for costs will continue to affect their organizations, as opposed to 92 percent last year.

THEIR TAKE

"Re-evaluating a hospital's current approach can be a challenge for revenue cycle leaders, but it can result in a great reward by maximizing the healthcare providers' overall return," said Dave Wojczynski, president of TransUnion Healthcare.

"Determining which patients or accounts may present the best opportunities for payment is just one way a healthcare provider can increase their chances of maximizing reimbursements for services rendered."

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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