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Independent physician practices can start increasing their cash flow and reducing their bad debt immediately-and they don’t need fancy software or renegotiated reimbursement agreements to do it. All they need is to have some simple systems in place.
One of the biggest changes in the healthcare system recently has been the growth of consumer-directed health plans (CDHP), a trend which has led to greater patient responsibility for the cost of their care.
According to a June 2014 survey from the National Business Group on Health, a nonprofit association of large U.S. employers, 57% of employers are implementing or expanding CDHPs. The percentage of employers offering only CDHPs continues to grow as well. In 2015, 32% of employers surveyed plan to have CDHPs as their only offering, up from 22% in 2014. With this shift, practices have to anticipate that a substantial portion of their income is no longer coming from an insurer.
Without processes in place to collect payment for services during a patient’s visit, some physician practices may find themselves struggling to collect from patients in full, or even at all. Cash flow can be especially low in the first and second quarters of the year, as patients have not yet met their deductible and many patients have 100% responsibility for their healthcare costs until they do. According to a September 2014 report from the Kaiser Family Foundation, the average general annual deductible for a single person enrolled in a high-deductible plan is more than $2,200 and $4,000 or more for families.
No physician or practice manager is alone in this struggle. According to a healthcare patient payment trend report from JP Morgan, practice managers have been focused on clinical applications such as electronic health records and scheduling rather than revenue cycle management and payment processing solutions. While their attention has been diverted, their bad debt has skyrocketed.
If you’re one of the independent practices -especially those with fewer than 10 staff members-dealing with this issue, here are three simple tips to implement in your practice today.
While for some it is standard practice to verify a patient’s insurance status either at or prior to an appointment, due to increased workloads and complications with obtaining benefit information, some practices are skipping this important step.
Not knowing if a patient is covered can be costly. And don’t stop at just confirming if the patient has coverage. Find out if the patient has a deductible and if it has been met. If you are able to ascertain the deductible balance, even better, because depending on your services, a patient may hit his or her deductible mid-visit.
Your staff should also gather information on benefit details tied to the services you offer and confirm if you are in-network for the patient. The more information you have, the more you can prepare your patients for what their responsibility likely will be.
Your front desk staff is your most important resource for collecting payments up front for new patients and on any outstanding bills for returning patients. Are your front desk staff members equipped to have these conversations with patients?
If benefits and deductible information is understood before a patient walks in the door, your staff is already in a better position for the conversation. The goal is not to turn your staff into collection agents, but it’s also important to try and collect whatever the patient owes before he or she leaves.
A 2009 McKinsey Quarterly consumer survey found that 52% of patients are willing to pay from $200 to $500 or more by credit or debit card at the time of a doctor visit, if they received an estimate at the point of care. The same study also found that 74% of insured consumers would be willing to pay out-of-pocket medical expenses of up to $1,000 per year.
Without proper systems in place to help manage patients and collect this money, independent physicians will struggle with cash flow. That’s because after a patient walks out the door, the chances of that patient paying drops considerably. According to a 2010 McKinsey report on healthcare payments, provider collection rates are 50% to 70% for small-dollar payments from insured patients. For self-pay patients, the rate is only 10%.
Establish a process and expectation for your staff to provide estimates to patients and collect at check-in for previous bills and at check-out for that day’s visit. From there it is all about scripting and training to help staff members know what to say, how to ask for payment and how to answer questions. Doing this for every patient can help increase your chances of getting paid. Make it part of your practice’s routine and you will change your business.
When McKinsey surveyed consumers to ask why they would not to pay a medical bill, respondents cited a lack of options for payment plans, poor timing of bills and difficulties coping with confusing statements or policies. Electronic statements, online bill pay and simplification are commonplace nowadays. Healthcare practices need to embrace these methods as well.
The shift to a retail-centric approach in healthcare is well under way. Smartphones have one-touch payment capabilities and major retail chains are including healthcare among their services. Patients want both to know what they owe up front and to have multiple options for paying, especially when their financial responsibility is growing.
Make it easy for your patients to understand what they owe and pay it in whatever valid form they want to give you. Accept credit or debit cards, payments over the phone, online through a portal, via a monthly billing plan or by check. Think of your front desk as a-point-of-sale terminal and help your staff members shift their mindset to work with patients to collect those funds any way a patient will pay.
Help your front desk staff stay informed so they become a trusted resource for your patients. To encourage patients to pay on the spot, offer an incentive such as a prompt-pay discount. For larger bills, offer payment plans that include a down payment before the patient leaves. The few dollars a patient saves can create motivation and save your staff time, money, paperwork and headaches chasing down the same payment months later.
If your staff is trained to collect the necessary information immediately and to remind patients of their responsibility, you’re more than halfway there. Making it part of your practice’s expected process eliminates the wiggle room or the excuses your patients might offer.
All of these ideas can be implemented without investing in much more than staff time. Your cash flow should increase and your bad debt decrease, which can help shorten your revenue cycle.
Enrollment in CDHPs is only going to grow. Practices that put simple systems into place today will benefit now and long into the future.
Hanny Freiwat is the co-founder and president of Wellero, developer of a mobile healthcare payment app based in Portland, Oregon.