How health care providers are
becoming finance managers
becoming finance managers
Working smarter on the insurance industry's high-deductible problem
July 22, 2016
By: David Dennis, Contributing Reporter
When the Affordable Care Act led insurers to extend coverage to approximately 15 million Americans, they responded by increasing co-payments and raising deductibles. How did hospitals adapt to this new normal? By returning to some old strategies — like outsourcing to finance companies and resuming pre-service collection efforts.
“Against a Wall: Innovating Patient Payments”, appearing in the September issue of HealthCare Business News magazine, details the consequences of those choices and charts the trend toward even greater patient liability. The article will explore the ways some hospitals are now using technology and innovating their collection systems to stay afloat, and highlights promising models for helping patients meet their obligations without scrimping on care.
A troubling trend
An estimated 60 percent of Americans have less than $1000 in savings, while the deductibles for families can be five times that amount. More and more, then, even covered families are finding it hard to meet their “self-pay” obligations. And those obligations are only growing. Gary Breuer, Vice President of Revenue Cycle at AMITA Health, estimates that patient liability amounts are growing more than six percent each year. The trend is likely to continue as employers look to save money by offering employees high-deductible plans. Similar patterns are at work in the ACA exchange programs.
This shift in liability from insurance companies to individuals recently contributed to a Los Angeles area hospital filing for bankruptcy, a move court documents attributed in part to the inability of its insured patients to pay what they owed.
With bad debt on the rise, the question must be posed: who has the motivation, access, and capability to stem the tide? Ultimately, it falls to providers to devise easier, more accessible ways to settle balances that patients find difficult to afford.
Challenges for providers
Policy answers to the self-pay burden are elusive or unpopular, so it is falling to health care providers — the entities with the most to lose — to meet the challenge themselves. Their first step? Acknowledging their new role as financial managers, and following the example from other industries of integrating financial planning and payment instruments into their core business.
In decades past, hospital billing systems aimed to collect around 10 percent of their annual revenue, but the new world of high deductibles and costlier co-payments has increased that figure to 30 percent. According to Breuer, many hospitals are successfully collecting on only half of that amount. To clarify bills and ease the experience of paying for medical care, providers must invest in better point-of-service and bill-pay instruments. They must make their collection process as consumer-centric as their care.
Signs of progress
Because self-pay is such a hot topic for health care leaders, providers have concluded that they need to innovate in three areas:
• Making the patient obligation clear from the outset;
• setting up financial programs and mechanisms to collect payments manageably; and
• making these options available via simple, user-friendly self-service functions.
Various technologies are being put to work on these three fronts. These technologies include predictive analytics about the cost of care and individuals’ financial capacity, self-activation kiosks and services, and multi-channel account monitoring, among others.
One provider, AMITA Health, has launched a solution from OnPlan Health into its existing billing system in pursuit of OnPlan’s 65 percent self-service activation rate. According to OnPlan Health CEO John Talaga, patients are often willing to pay but are thwarted by confusing interfaces or plain embarrassment. “The two keys are to identify up front what a patient can afford and make it easy for them to self-activate a pre-approved payment arrangement, so consumers don’t have to call someone if that makes them uncomfortable.” An ability to closely monitor the payment plan chosen by the patient and to automatically add new services can help increase patient pay and prevent expensive placements to collections.
Down the road
Consumer-centric systems like OnPlan’s can be incorporated into existing operations without disruption to guide the payment plan negotiation automatically, redirecting staff time to patient care or customer service. This is the type of game-changer that health systems need to be adding to their collection strategies. More broadly, a shift to “smart” payment plans should help patients themselves adapt to the new realities of high-deductible health care.
When the Affordable Care Act led insurers to extend coverage to approximately 15 million Americans, they responded by increasing co-payments and raising deductibles. How did hospitals adapt to this new normal? By returning to some old strategies — like outsourcing to finance companies and resuming pre-service collection efforts.
“Against a Wall: Innovating Patient Payments”, appearing in the September issue of HealthCare Business News magazine, details the consequences of those choices and charts the trend toward even greater patient liability. The article will explore the ways some hospitals are now using technology and innovating their collection systems to stay afloat, and highlights promising models for helping patients meet their obligations without scrimping on care.
A troubling trend
An estimated 60 percent of Americans have less than $1000 in savings, while the deductibles for families can be five times that amount. More and more, then, even covered families are finding it hard to meet their “self-pay” obligations. And those obligations are only growing. Gary Breuer, Vice President of Revenue Cycle at AMITA Health, estimates that patient liability amounts are growing more than six percent each year. The trend is likely to continue as employers look to save money by offering employees high-deductible plans. Similar patterns are at work in the ACA exchange programs.
This shift in liability from insurance companies to individuals recently contributed to a Los Angeles area hospital filing for bankruptcy, a move court documents attributed in part to the inability of its insured patients to pay what they owed.
With bad debt on the rise, the question must be posed: who has the motivation, access, and capability to stem the tide? Ultimately, it falls to providers to devise easier, more accessible ways to settle balances that patients find difficult to afford.
Challenges for providers
Policy answers to the self-pay burden are elusive or unpopular, so it is falling to health care providers — the entities with the most to lose — to meet the challenge themselves. Their first step? Acknowledging their new role as financial managers, and following the example from other industries of integrating financial planning and payment instruments into their core business.
In decades past, hospital billing systems aimed to collect around 10 percent of their annual revenue, but the new world of high deductibles and costlier co-payments has increased that figure to 30 percent. According to Breuer, many hospitals are successfully collecting on only half of that amount. To clarify bills and ease the experience of paying for medical care, providers must invest in better point-of-service and bill-pay instruments. They must make their collection process as consumer-centric as their care.
Signs of progress
Because self-pay is such a hot topic for health care leaders, providers have concluded that they need to innovate in three areas:
• Making the patient obligation clear from the outset;
• setting up financial programs and mechanisms to collect payments manageably; and
• making these options available via simple, user-friendly self-service functions.
Various technologies are being put to work on these three fronts. These technologies include predictive analytics about the cost of care and individuals’ financial capacity, self-activation kiosks and services, and multi-channel account monitoring, among others.
One provider, AMITA Health, has launched a solution from OnPlan Health into its existing billing system in pursuit of OnPlan’s 65 percent self-service activation rate. According to OnPlan Health CEO John Talaga, patients are often willing to pay but are thwarted by confusing interfaces or plain embarrassment. “The two keys are to identify up front what a patient can afford and make it easy for them to self-activate a pre-approved payment arrangement, so consumers don’t have to call someone if that makes them uncomfortable.” An ability to closely monitor the payment plan chosen by the patient and to automatically add new services can help increase patient pay and prevent expensive placements to collections.
Down the road
Consumer-centric systems like OnPlan’s can be incorporated into existing operations without disruption to guide the payment plan negotiation automatically, redirecting staff time to patient care or customer service. This is the type of game-changer that health systems need to be adding to their collection strategies. More broadly, a shift to “smart” payment plans should help patients themselves adapt to the new realities of high-deductible health care.