Getting Ahead of the Revenue Cycle Curve with Technology

Mark Snow, for HealthLeaders Media, June 7, 2010

The nation's recent economic downturn has spread the pain of increased healthcare costs from patient to provider, as outstanding provider debt has been on the increase. According to Fitch Ratings' December 2009 For-Profit Hospital Industry Quarterly Diagnosis, for-profit hospitals saw their bad debt expense as a percentage of revenue rise sharply during the third quarter of 2009—from 19.4% in 2008 to 21.2% in 2009. The ratings agency predicted this trend was not likely to abate for several more quarters.

With President Obama's signing of the Patient Protection and Affordable Care Act in March, healthcare coverage will be extended to 32 million Americans who currently lack it. The percent of the U.S. population that has health insurance will increase from 83% to approximately 95%. So millions of additional people will be receiving healthcare services and be responsible for paying for some of their care.

It's understandable that some in the healthcare industry may be saying, "If we can't get all our existing patients to pay on a timely basis now, how will we get even larger numbers to do so?"

While many healthcare providers struggle with this question, others are ahead of the curve. "Successfully managing revenue cycles is crucial to every medical practice's profitability and long-term viability," says Janet Boos, president of Escondido-based California Healthcare Billing, Inc. (CHMB), which provides medical billing and reimbursement services to over 1,000 physicians in 200 medical practices throughout the state. "We focus on the business side of healthcare, helping clients maximize revenues and cash flow, streamline operations, control costs and reduce compliance risks—freeing them to concentrate on patient care."

Since its inception, CHMB offered a pre-collection calling service to its clients. The company's employees targeted clients' patients who had overdue balances, offering to take credit or debit card information over the phone to clear their balances. But according to Boos, the company had limited success with the pre-collection service.

"We were only making live calls during regular business hours. Since we weren't calling when most people were actually at home, we weren't reaching many of our clients' patients. The service didn't have the impact our clients were hoping for, and CHMB employees were engaging in work that wasn't producing results and was increasing our labor costs. Still, we believed the right pre-collection service would be a benefit to our clients."

In October 2007, Boos investigated a HIPAA-compliant, interactive automated pre-collection calling service designed to increase patients' urgency to pay balances in a timely manner, reducing receivable days and increasing in-house collections. She was immediately intrigued because, in her experience, residents of California were more receptive to automated calling services than the American population in general. "Many businesses and schools had been using automated calling for years, and Californians had come to expect that such services were used to communicate important information."

Boos' interest increased when she learned that the average user of the calling service achieved a return on investment of more than 12 to 1 (i.e., for each dollar the medical practice spent on the application, they brought in more than $12.00 they would not have collected without it).

Using an interactive script in English or Spanish, the service authenticates the party, reminds them that they have an overdue balance, then collects credit card, debit card or check information, insurance details and other information necessary to resolve their accounts. Patients may completely self-serve or automatically transfer to the healthcare provider's billing staff. The self-serve option is particularly popular among patients who may be embarrassed to speak with a live operator about an overdue balance.

The service allows hospitals and physicians to make thousands of interactive, personalized phone calls during prime time. It also distinguishes patients who are willing to pay from those who are not likely to pay. The service is flexible and customizable with multi-tiered branching software.

The entire pre-collection calling application is web-based, so no additional software or hardware was required to implement and run the service, and customer support was provided as part of the product offering. "From a capital investment standpoint," says Boos, "it was easy to implement—and no additional staff was required to operate the system."

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