Many patients with high-deductible health plans are struggling to pay their hospital bills. The traditional "pay-and-chase" collection model no longer is effective for most healthcare providers.
A majority of American adults reported being unable to afford an unexpected $500 medical bill without borrowing. When patients have to weigh paying their cell phone bill or car insurance against a medical balance, a majority choose the former. In fact, 64 percent of patients will leave their hospital balances unpaid after six months.
In an Oct. 5 webinar sponsored by Naples, Fla.-based ACI Worldwide and hosted by Becker's Hospital Review, Michael Trilli, senior analyst at Boston-based market research firm Aite Group, Mark Archer, co-founder of Buffalo, N.Y.-based Noggintechs, and Steve Kramer, vice president of ACI Worldwide, shared techniques and strategies on how hospitals can increase patient collections.
More payments coming out of patients' pockets, providers must redesign their revenue cycle
Under HDHPs, many consumers need help paying larger medical bills. At the same time, patients expect the same streamlined financial experience in healthcare as they do in other consumer-driven industries. This means providers must design a payment experience with financial engagement in mind.
"The environment is moving from a copayer type of environment to a medical bill payment type of environment, and that's a drastic change," says Mr. Trilli. "This is a trend that is going to continue to escalate as we move forward in the years."
In 2016, consumers paid $423.8 billion toward medical bills. Mr. Trilli expects this number to increase to $445.7 billion by the end of 2017 and ultimately reach a total of $515.1 billion by the end of 2019.
"This shift requires providers consider two new areas that impact their collection strategy as this trend continues to move forward," he adds. First, providers have to figure out how to get medical bills to be a priority for consumers, and then, they must figure out how to create a sustainable collection model.
The new proposed payment model
Patients receive on average 3.3 billing statements before paying an outstanding expense, and 30 percent of patients leave their healthcare provider without paying anything, presenting a disengagement problem.
Consumers find medical bills confusing and difficult to understand compared to other bills, such as utilities or internet, ultimately driving down their desire to pay, Mr. Trilli says. Those other bills are often listed on one single, consolidated bill and offer consumers the option to pay in installments, compared to healthcare, whose bills are lengthy or may require they pay in full.
Mr. Trilli proposes a three-part patient engagement model in which the point-of-service goal changes from collecting a copayment to receiving a commitment to pay. The idea behind his model is to turn a one-time payment event into recurring events. He recommends a personalized and digital approach that gives patients more options.
According to Mr. Archer, whose company, Noggintechs, uses patient payment analytics tools to boost patient revenue, organizations should engage patients in the financial component of their care throughout the entire episode of care, from when the appointment has been made until the bill has been paid. Payment models thrive when providers know how to communicate effectively. For example, collection rates could be 25 percent higher if providers communicate with their patients on the channel they prefer.
Specifically, providers should contact patients about their financial responsibility and set up payment plans as early as possible, including before the appointment.
"Remember … you are competing for the consumers' disposable income, and it's a zero-sum game. There's only so much to go around," Mr. Archer says, adding that "pre-appointment is also an opportune time to communicate balances owed from previous services." Following up with emails, text messages or messages on patient portals also contributes to increased payments made.
A propensity payment model, which calculates the odds a patient will pay, works best when it considers how a patient paid his or her past medical bill against how the patient pays his or her other bills. The model uses statistical analytics and machine learning to score patients from more to less likely to pay so collection strategies can be more focused and personalized. It considers variables like balance due, past behavior and demographics.
Personalize your collections messages
Mr. Archer says it is important to use data to segment patients based on their past financial behaviors and ability to pay to fine-tune collection strategies. Patients are then divided into four subsets — forgetful, entitled, struggling and problem. For example, when dealing with an entitled patient, or someone who is able to pay but does not wish to pay anymore than his or her premium, communication should emphasize rewards for paying the medical bill in full. Contacting this group via mail and text messages with medium to high frequency and offering them multiple payment options reaps the most benefits.
Once an array of data is collected, machine learning can more accurately guide and accelerate these analytics-driven segmentation models.
"The overarching idea is to find the right message with the right tone [and] send it through the best channel at the right frequency with compelling reason or offer at the right time," he says, adding that this communication should ensure "all patients [are still] treated with respect."
When getting ready to deploy new collection strategies, Mr. Archer recommends starting with the things that "have the lowest level of effort but good impact" — begin by building communication channel functionality, then vary the tone and frequency of billing messages. Mr. Archer recommends offering rewards for early payments and payment plans, all while using analytics to determine how to offset the money spent with the returns. The last step may involve using live operators to work on unique segments that respond well enough to offset the higher costs.
Satisfying patient demands
Patients (88 percent) want easier to read, more straightforward healthcare bills according to an Aite Group survey cited by Mr. Kramer. They also want convenience, multiple funding options or customized payment plans, as well as increased security, speed and payment confirmation.
"There are all kinds of challenges that healthcare bills give you that those other bills don't," says Mr. Kramer, whose company, ACI Worldwide, provides patient financial engagement technology to raise patient revenue by 27 percent.
Mr. Kramer recommends first determining your return on investment — because simple calculations show it can be well worth adding predictive analytics and machine learning to segment and communicate with patients about paying medical bills.
"The status quo just isn't an option anymore … you have to start thinking about [patient payments] as a bill payment," says Mr. Kramer. "Are you reaching the consumer where they live? Are you giving them the options they need? Are you reaching them the appropriate way and offering them ways to pay it if they don't have it today? [This] can drive those payments and interactions."
Keep learning
The key is to better understand how patients want to pay. See the survey results of how Americans pay for healthcare.
To view the webinar recording, click here.
To view the webinar slides, click here.