Healthcare is undergoing a seismic revenue cycle shift. In the past, the bulk of practice revenues came from claims reimbursements from payer organizations. Now, with deductibles and co-pays rising, patient responsibility payments make up as much as 30% of a practice’s total revenue.
One survey found that the total number of consumer payments to providers increased by 193% from 2011 to 2014. Meanwhile, the Medical Group Management Association (MGMA) reports that, for the typical practice, the average amount due per office visit is about $110.
Bad Debt Dilemma
As patient financial responsibility continues to rise, so too does bad debt. For the average practice, patient non-payment can range from a few percent of revenue up to more than more than 10%. Meanwhile, the recovery rate on aged receivables lags behind, averaging just 16.7%, according to ACA International’s Top Collection Markets Survey.
By specialty, the approximate average rate of recovery is:
Exacerbating the problem, the MGMA reports that 30% of patients leave their physician’s office without paying anything. According to the American Group Management Association (AGMA), it then takes an average of 3.3 billing statements before they make good on that debt or before the practice writes it off as uncollectable. Once the debt is sent to collections, the practice will likely recover just $15.77 for every $100 the patient owes.
Retooling the Revenue Process
To thrive in this new environment, practices need to re-tool their revenue cycle process and workflow to optimize collections and reduce patient bad debt. Specifically, practices need to identify ways to collect patient payments and/or payment data and preferences at the time of service and to establish processes to it as convenient as possible for patients to pay outstanding balances.
Paper statements are not doing the trick. Consumers have spoken and multiple surveys have found that the majority want to pay their bills electronically. According to the “Trends in Patient Engagement” survey by TechnologyAdvice (TA), nearly 61% of patients consider digital services, including online bill pay, to be “important” or “somewhat important.” More than 25% indicated that bill pay was the top digital service they wanted to see offered by their physician.
Note from the TA authors, “Providers should embrace digital services as beneficial not only for patients, but also for their well being as a practice.”
Thus, the best revenue optimization strategy is one that considers all the needs and preferences of today’s patient. These include the convenience of online and mobile payment options, payment plans with automatic payment options and giving clarity and transparency to the services for which they are being billed.
Making Payments Convenient
In many cases, the most efficient and cost-effective approach to retooling the revenue cycle to align with today’s patient-centric payment environment is to leverage a third-party software solution capable of hitting all the important touch points to increase collection of co-payments and patient responsibility. Look for a cloud-based platform which offers the most security and flexibility, streamlines front and back office, and eliminates the upfront costs associated with software and hardware.
Streamline billing and collections with an integration to the practice’s existing Patient Management and/or Electronic Medical Record system. Software integration opens the door to additional functionality such as appointment reminders to decrease no-shows, another significant drain on the revenue cycle.
Find a solution that can provide a comprehensive suite of practice- and patient-friendly technology tools which can be customized to meet the practice’s unique needs. For example, an electronic payment solution leveraging text messaging technology can immediately notify patients of outstanding balances, remind them of co-payments in advance of visits and provide one-click access to online payment processing. Electronic collections improve practice profitability, reducing bad debt with automated payment plans and electronic statements thus eliminating the cost of collections by delivering electronic statements by text or email—the method of payment communications preferred by 65% of patients.
Finally, verify that all digital services are delivered across a PCI and HIPAA-compliant platform. This will keep information safe and instill patient confidence in the system.
A New Revenue Cycle
Writing off double-digit percentages of bad debt and waiting 120 days or longer to collect a patient’s share of healthcare costs, is no longer a sound revenue cycle strategy. To survive and thrive, practices must seek tools and technologies that speed collections by making it easy and secure for patients to pay their bills.