In the healthcare space, rising out-of-pocket costs are shifting payment responsibility from traditional payers to patients. While this transition is not surprising given the increased enrollment in high-deductible health plans, it has become a large cost burden on health systems and a bigger challenge than expected.
In 2017, patients saw their average out-of-pocket costs increase 11 percent to an average of $1,813, according to a TransUnion Healthcare analysis. This trend has shown no signs of slowing, meaning without proper self-pay strategies, providers will continue to leave a lot of revenue on the table and inflate their uncompensated care costs. In fact, nationwide uncompensated care costs for hospitals increased from $35.7 billion in 2015 to $38.3 billion in 2016, according to the American Hospital Association.
This content is sponsored by Change Healthcare
"We've seen time and time again that this trend is not abating," said Raghu Bukkapatnam, Chief Strategist, Technology Enabled Services at Change Healthcare. "In 2003, we were talking about copays at $100, a deductible balance or maybe a little bit of coinsurance. But now it is close to $2,000 in actual patient obligation, which brings additional challenges to health systems and increases bad debt."
Mr. Bukkapatnam — along with Kelley Blair, senior vice president and general manager of health systems and corporate technology enabled services at Change Healthcare, and Scott Schrader, chief commercial officer of technology enabled services at Change Healthcare — joined nearly two dozen hospital and health system leaders to discuss the challenges of this shifting cost burden and offer self-pay management strategies. The discussion occurred on Nov. 13 during an event at Becker's Hospital Review 7th Annual CEO + CFO Roundtable in Chicago.
The challenges: A disjointed patient experience; staff attrition & more
Providers are increasingly recognizing patient pay is in a financial class of its own — one that completely differs from traditional payers and relies heavily on the patient experience.
"Self-pay management and patient experience morphed into patient financial health and are now one and the same," Mr. Bukkapatnam said.
However, the financial experience for patients is often disjointed, impersonal and ill-timed, leaving patients confused about their bill and dissatisfied with their care.
"Whether it's a human interaction, whether it's an electronic interaction, whether it's a printed statement, whether it's an outbound outreach, the patient billing path is a disjointed experience that creates dissatisfaction, adverse outcomes and results in a negative perception of their actual experience," Mr. Bukkapatnam said.
Another huge challenge to achieving an effective self-pay strategy is staff attrition. One interim CEO from a four-hospital health system in the West said his finance team has seen a 50 percent staff turnover, which has been his largest problem with establishing a self-pay strategy.
A lack of a consistent approach to financial education and services across staff, vendors and patients poses another challenge. Patients are often left in the dark about their payment liability until they receive their bill. This not only makes it a poor experience for patients, but it also increases the burden on staff, who must educate patients after the bill is sent out, explained a chief compliance officer for a 400-bed hospital in the Northeast. Instead, providers should have a consistent approach to staff education, so they can provide patients financial education and services at key moments.
"As healthcare finance leaders, we spend years studying billing. Patients spend one visit and we expect them to capture all of it. It's something we need to change … being better at explaining financial obligation to patients before the bill goes out," she said.
So, patients are a big payer … Now what? 4 steps for optimal self-pay collections
While there are numerous hurdles to establishing an effective revenue cycle strategy in the new era of patient pay, providers are not without recourse, explained Ms. Blair. She went on to detail several steps providers can take to achieve optimal self-pay collections.
Here is a breakdown of the four steps:
1. Acquire core capabilities, establish codified processes. Providers should ensure they have the right capabilities and standardized processes in place to obtain the most accurate information and data on patients. This allows health systems to get a better grasp on who their patients are by collecting information on demographics, past medical history and credit history. It also allows providers to accurately complete estimates of out-of-pocket costs for each patient.
2. Leverage analytics. The second step involves leveraging analytics to segment patients based on propensity to pay. To achieve optimal results within this step, health systems should have the right technologies, including artificial intelligence and automation to increase efficiency and accuracy.
3. Manage the patient experience and meet their expectations. According to Ms. Blair, fully managing the patient financial experience stretches beyond tasks typically included in the revenue cycle process.
"This moves away from just looking at the core revenue cycle functions … it is predicting patient needs before they need to think about paying a bill. It's asking, before they're even in a vulnerable state, how do I help them start to understand this?" Ms. Blair explained. "It's learning more about the patient, such as their communication preference, to better guide them once they do need services through the right process at the right time."
A regional CEO from a 30-hospital system in the South added that meeting patient expectations and explaining bill-pay is now a critical component of effective self-pay management, "If I'm going to go to a four-star hotel and I expect I'm going to pay for a two-star rating, I'm going to be unhappy. If I go to a four-star hotel and I know that I'm going to pay four stars, I may not be happy, but at least I'll be willing to pay. Same goes for hospital payments."
4. Integrate and coordinate. An effective self-pay strategy includes integrating technology, services and patient experience solutions into a cohesive system that shares data and connects the front-end of the revenue cycle to the back-end. A coordinated experience includes training staff on best practices for patient financial education to ensure patient interactions are orchestrated in a consistent manner. Overall, this integrated self-pay system will allow providers to eliminate unnecessary touchpoints and present the patient with the right information at the right time.
These four steps will not only help health systems improve collections and eliminate bad debt, but also improve patient satisfaction.
The Change Healthcare solution
Change Healthcare, a healthcare technology company focused on revenue cycle management solutions, is aligning its various RCM assets to solve the challenge of self-pay. Its solution facilitates patient entry into the health system, captures information to optimize patient interactions, educates the patient on payment liability and tailors payment options to each patient's unique financial situation.
"We combine our vast amount of data and insight and intelligence with our products to create an infrastructure that speeds transformation and eliminates redundancies and inefficiencies that have historically plagued healthcare," Mr. Schrader said.
Overall, the revenue cycle must evolve to facilitate self-pay and manage relationships with patients. Without an effective, integrated patient payment strategy, providers lose out on revenue capture and have the potential to harm the patient experience.