How to Increase Receivables While Preserving Patient Relationships

In this volatile economic environment, it's no surprise that hospital staff members who collect money at the beginning and end of service have their work cut out for them. Securing patient-pay receivables is getting more difficult by the day, and with bad debt, now around 7%-10% expected to mushroom, successful collection has never been more important to a hospital's bottom line.

For many hospitals, patient-pay dollars mean the difference between bottom-line profit and loss. Nevertheless, many accounts receivable departments continue to rely on marginally effective collection strategies to recoup what is owed.

The simple truth is that there are methods and techniques available for your team to achieve the objective of collecting a significant percentage of outstanding revenue, while still preserving positive relationships with patients, and casting your organization in the best possible light.

The Challenge
If you thought the major obstacle in health care debt collection stemmed from an inability of most patients to pay their outstanding bills, particularly their deductibles and co-pays, you'd be wrong. Approximately 65% of bad debt comes from patients who carry insurance, moreover approximately 50% of patients with "written-off" accounts actually have the ability to pay in full.

If that's the case, why isn't every hospital collecting all the money that they are owed?

The crux of the non-payment issue lies with the patient and, to a large extent, your own staff level of comfort with the process of collecting these deductibles and co-pays upfront. Although it is likely your organization's policy to collect this money, your team may not be trained to do it effectively. As a result, your internal collection mandates simply aren't enforced.

Exacerbating this situation are the patients. Being asked to pay at the point of service triggers a fight or flight response in many people (and the combative ones tend to accuse the institution of caring more for revenue collection than the patient). So your second challenge is to change your patients' perception around this process.

Changing How Patients Think
There are two reasons patients don't pay their outstanding debt:

1. They believe either they can't pay it (interestingly, research shows that nearly 60% of patients believe they can't pay their bill; while 40% of patients believe they can pay), or.
2. They believe they don't owe it (research also shows that 98% of patients with outstanding obligations believe that they do owe the money).

Neither your staff nor the patient can change the actual situation, but they can help patients change their perceptions (or misperceptions) and greatly reduce patients'  resistance toward satisfying their debt.

There are several important patient-friendly steps to take to accomplish this objective:

1. Develop a system where patient rapport is quickly established at the point of service, making it much easier to collect deductibles and co-pays.
2. Use, both for in-person and phone collection efforts, a script with carefully-chosen language that doesn't invoke a "fight-or-flight" reaction from the patient. For example, when a patient at the point of service says, "Just send me a bill." Your staff member won't respond, "Okay. " Rather, they will be trained to respond something to the effect of, "I know you'd rather we send you a bill, everyone would, and I also know that you probably hate getting stacks of bills in the mail. Wouldn't you really like to avoid that and take care of this now?"
3. Understand that while nearly all patients acknowledge that they owe the debt and may be able and willing to pay, they are often fearful that they can't. Build a response through language that promotes empathy, builds rapport and trust, and motivates payment.
4. Educate the patient. Make sure the patient understands their payment options and work with them toward a successful resolution.

Getting Your Staff to Buy In
A crucial component of any bad debt reduction program is the buy-in of your patient-pay receivables team and other organization members that handle point-of-service interaction with incoming patients. To accomplish this important task, you must clearly communicate and demonstrate that your organization will:

• Make patient-pay an organizational priority.
• Improve front-end training to remove any discomfort in asking for payment.
• Set collection goals and reward achievement.
• Enhance screening for government program eligibility.
• Improve financial counseling services by: expanding payment opportunities, providing prompt-pay discounts, setting policies that support some form of upfront payment for elective services, and prioritize back-end collections.

It is only when everyone understands the importance of point-of-service collection and follow-up collections that noticeable improvement will be seen.

Outsource It
Implementing an effective, comprehensive point-of-service collection system is a big job. It's critical to develop a process that is tailored to the needs of your institution, gets the staff buy-in that's necessary and preserves patient relationships. Identifying seasoned accounts receivable management partner to review your practices, one with a proven track record of establishing and managing point-of-service training and collection as well as follow-up collection is an option you should consider.

These firms have the ability to provide your point-of-service and collections teams with expert training and the other tools necessary to improve your collection effectiveness while providing a satisfactory experience for the patients involved.

David Morrisey is Director of Development of KeyBridge Medical Revenue Management, an Ohio-based accounts receivable management firm specializing in the healthcare industry.