A trend that is having a very significant impact on healthcare payments today is undoubtedly the shift of financial accountability to healthcare's new patient consumers, with self-pay now being recognized as the third largest payer behind Medicare and Medicaid. As a result, there is an increase in bad debt and patient liability on the provider side, forcing providers to change the way they do business.
Today, hospitals and health systems are akin to retail organizations. With the goal of providing consumers with multiple payment options — either at the point of service or afterwards — healthcare organizations have begun using website portals, mobile capabilities, payment plans and sophisticated interactive voice technologies, to name a few. The industry is abuzz over predictive analytics that give providers the optimal ability to collect payment from the new patient-consumer population. This approach involves the ability to accurately forecast propensity of patients covered by high-deductible health plans to pay — all based on geographic, demographic and historical payment data. This strategy deviates from seeking out a traditional credit score.
This content is sponsored by Zotec Partners
T. Scott Law, founder and CEO of Zotec Partners, cites a Connance study regarding the use of credit scores in determining a patient's payment history, noting, "Up to 25 percent of patient pay revenue can come from households that have no or thin credit bureau files, which would make these accounts fall outside the capabilities of a credit-based scoring model, essentially because they are 'unscorable.'" He goes on to say that credit scores, while addressing consumer debt and purchasing behaviors, cannot be compared to medical debt.
In this same vein, healthcare is currently undergoing the Google effect, or the idea that people are no longer ever at a loss for answers because of powerful search engines, according to Mr. Law. He says, "Data essentially eliminates gut reactions and personal bias from business decisions because it provides answers in black and white."
Additionally, he remarks that many providers are not up to speed when it comes to putting a focus on how the patient experience fits into their revenue cycle, adding, "The management of clinical applications such as EHRs, plus administrative functions related to scheduling and admissions, all tie into the patient experience side of the equation, which has a direct and very relevant impact on physician revenue."
On the flip side of the coin, healthcare providers are certainly aware of the complexities they face, including what and when to bill patients throughout the revenue cycle, and especially calculating a patient's likelihood to pay. Mr. Law says that by using data to calculate a patient's propensity to pay, health providers can determine which collections strategy will yield the maximum return in revenue. "There are millions of data elements generated in a year, including social data, demographic information, social patterns, clinical data and buying patterns, including when patients like to pay their bill," he adds.
Healthcare is a new "relationship" business
As the healthcare industry becomes more focused on meeting the demands of consumer behaviors, understanding patients' tendencies toward payment is increasingly central to revenue cycle management and collections. This is especially true in an era when high-deductible health plans are more popular and patients carry more responsibility for their coverage, according to Mr. Law. "This used to be a physician-to-carrier relationship, but it has now transformed into a physician-to-patient or physician-to-consumer relationship," he notes. Mr. Law goes on to say that consumers have begun to apply the same expectations they have in other consumer-driven business exchanges, adding, "Consumers want their healthcare exchanges to match the experiences they get with Amazon, Uber and Google, from the convenience and fast automation, to the cashless transaction."
As patients continue to rely more on their time-tested consumer behaviors and tendencies in their healthcare interactions, hospitals must now oblige them. "This is where big data can come into play," Mr. Law notes. "Providers need to be more mindful of who they are dealing with on a patient-by-patient block, customize the patient experience and get the best results."
Direct, clear communication with patients is also key in these interactions. It is important to determine a patient's responsibility after a provider ascertains his or her eligibility status, co-pay amount owed, deductible balance and other miscellaneous information related to fees, according to Mr. Law.
To determine the propensity to pay, providers need personas
Merriam-Webster defines a persona as "The aspect of someone's character that is presented to or perceived by others." Zotec Partners uses a platform that draws from troves of data to similarly create "personas" of individuals and payers in order to optimize the revenue cycle. Mr. Law states that by analyzing an individual's persona, providers can determine an individual's likelihood to pay, or the propensity for conflict.
"Knowing these tendencies ahead of time allows hospitals to tailor billing interactions and collection techniques to individuals to minimize friction in making payments, and to maximize collections," Mr. Law remarks.
A patient's demographics are often tied to the likelihood that he or she will respond to a text message notification about medical bills versus receiving paper statements in the mail, according to Mr. Law. "An elderly patient may not be as technologically savvy as a patient who is a younger, generation Y parent," he says. "For the elderly patient, the paper statement or phone call might work better based on payment history and demographic data, whereas for the younger patient, we would be better served to employ a mobile strategy to collect payment."
Mr. Law adds that, based on these patient characteristics and tendencies, hospitals can decide how to best interact with individuals and ultimately collect money.
Providers should, however, view their collection efforts as a return on investment. Mr. Law suggests, "Providers should invest their resources on accounts where extra efforts will yield net cash returns, specifically on patients who have a propensity to complain."
If a patient's persona reveals a strong propensity to pay, then groups can likely avoid investing collection resources on accounts that would pay anyway, especially given a patient's payment history paired with other elements of the patient persona, Mr. Law notes. He goes on to say that patient personas should reflect both the expected collection amount and risk/propensity for friction, in order for providers to ensure they are putting their efforts on the right patients, and with the right frequency.
Patient payments tie into patient satisfaction
Healthcare institutions rely on billing and collections to remain financially stable, but they may not be aware of the large impact that billing and collections have on their patient satisfaction scores as well, according to Mr. Law.
"When the Department of Health and Human Services decided to base 30 percent of hospitals' Medicare reimbursement on patient satisfaction survey scores, they did not factor in the methods that were being used to collect payments from patients, nor the vast cultural and demographic differences that each hospital sees, and must contend with, in order to keep patients happy," says Mr. Law. A negative billing experience can greatly increase a patient's frustration with the hospital, which can then be tied into a patient's propensity to complain, he adds.
Further supporting Mr. Law's stance on the issue, a 2016 study by Connance found 74 percent of satisfied patients paid their medical bills in full, compared to 33 percent of their lesser satisfied counterparts. "In sum, patient dissatisfaction with financial processes can negatively impact satisfaction scores… and an institution's bottom line," Mr. Law says.
Organizations must think through the entire transaction and the impact it will have, and not just for one individual patient. Mr. Law believes the greatest takeaway in today's new collections strategies is that they must be anything but cookie-cutter. He says, "Providers must attempt to balance their revenue cycle management techniques with efforts that reach patients on a personal level, including finding ways to improve each unique patient's experience while positively impacting cash flow for the hospital."