High-deductible health plans sound great if you’re an insurance company collecting premiums from patients who never exhaust their deductibles; or if you’re an employer who wants to reduce your healthcare expenses; or if, for whatever reason, you want to discourage people from seeking care that’s anything but absolutely necessary.
But for providers and many patients, high-dollar deductibles can be a nightmare.
For patients, sometimes confused and often already struggling to make ends meet, bills that are much larger than expected have become the norm, and that’s if they expected any bill at all. And if they can’t pay—or won’t—providers are, of course, the ones left holding the bag.
Since 2000, hospitals have provided more than half a trillion dollars in uncompensated care, according to the American Hospital Association. And although the numbers dipped in 2014 and 2015, after years of steadily climbing, the numbers were on the rise again in 2016.
Hospitals will always have to deal with bad debt, but slicing even a small percentage off the top of that mountain could mean significant added revenue.
All available means
The good news for providers, who, on top of everything else, must now also function as aggressive bill collectors, is that most people say they actually want to, and can, pay their out-of-pocket charges.
The goal, then, should be to use all available means to make sure those good intentions don’t get frittered away. Here are 11 ways to reduce bad debt:
- Address the institutional culture. The more acceptable bad debt is considered to be, the more bad debt there will be. Staff members need to understand the vital importance of reducing bad debt and the rewards that reducing it can bring. And look for ways to reward high-performers on staff.
- Train staff to educate patients upfront. Patients are still too often completely in the dark when it comes to their coverage and responsibilities.
- Be sure staff are trained to estimate the costs that patients will be expected to pay.
- Consider taking advantage of propensity-to-pay tools, which can paint a picture of a patient’s financial situation through various sources, and help pinpoint patients who are likely to present bigger challenges.
- Ask for payment, or partial payment, upfront, especially for elective procedures. Collecting some or all of the co-pay before services are rendered, rather than assuming the bill will be paid after the fact, is a very effective strategy that surprisingly few facilities use.
- Work with patients to set up manageable payment plans, and then make sure payments are being made. Large bills are much more palatable when they’re broken into bite-sized chunks.
- Work with poor or low-income patients to find alternative resources, such as charities, community sponsorships, or low-interest loans.
- Make it easy for patients to pay. This is the 21st century. Patients want to be able to pay their healthcare bills online, the way they pay most other bills. But too many facilities still insist on billing via snail mail. Who has time to write out checks and drop them in the mailbox? How many bills get buried under magazines or grocery store circulars and forgotten? Cloud-based providers allow patients to pay their bills with one click on a keyboard.
- If you’re not effectively reducing bad debts, try to figure out why. An interdisciplinary task force might be able to brainstorm causes and solutions.
- Communicate, communicate, communicate. Trying to collect money doesn’t come easily for most people, but lack of clarity and lack of urgency are among your biggest enemies. Staff and patients must have crystal-clear expectations.
- Know when to let go and turn the matter over to a collections agency. If three months have gone by, your chance of collecting is dropping fast. But that doesn’t mean you have to accept that you now have a bad debt. Choose a reputable agency that will minimize threats and work with both you and your patients in a collaborative way.
Patient payments now account for more than a third of provider revenue—seven times as much as they accounted for at the turn of the century! In an increasingly competitive environment, providers simply can’t afford to take a relaxed approach when it comes to getting patients to pay the bills they’ve incurred.