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Online Recurring Payments Cut Bad Debt Simply, Cheaply

 |  By kminich-pourshadi@healthleadersmedia.com  
   November 08, 2010

For many hospitals and health systems, keeping patient bad debt under control is like pushing a 2,000-lb. boulder up Mount Everest. No matter how strong the facility is financially, bad debt has a way of crushing a lot of fruitful cost-cutting efforts. What if you could change just one thing on your system and suddenly start to see your bad debt turn into revenue? You can, if you add an online recurring payment option.

It’s not new, but online self-service payment technology is far from mainstream at hospitals nationwide. And those that have an online payment option may not have set up a recurring payment feature. That's a missed opportunity for hospitals, however, as there are more than a few greenbacks to be garnered by adopting the same technology that retailers have been using online for years.

That’s exactly what Winter Park, Fla.-based Adventist Health System discovered. Adventist, which ranks as the largest nonprofit Protestant healthcare provider in the nation, began seeing the financial benefits of adding recurring payment technology to its website in the past year.

Since November 2006, Adventist Health System, which provides care to more than four million patients annually, has had online payment capabilities, but something was missing. Tim Reiner, vice president of revenue management for the 7,700-bed health system explains that for nearly nine years his team has made it a priority to work with patients to secure their portion of the bills, but they couldn’t hit on the right formula to increase payment numbers. While it had improved point of service collections overall, Adventist was still seeing high amounts of unpaid patient debt.

It’s estimated that hospitals and health systems collect anywhere from 35%?65% of the remaining patient balance after insurance—Adventist calculated that percentage to be around 58%.

“We really needed to move the needle on that metric,” says Reiner. “Hospitals aren’t really in the business of, nor is it our core competency to, monitor long-term collections or to remind people of payments.”

In an effort to reduce billing that ended up in long-term collections, without resorting to sending bills to an “early-out” collection agency, last year the health system decided to expand its use of self-service technology to give patients the ability to enroll online in recurring payment plans for outstanding balances, he explains.

The costs were minimal—Adventist simply added a new component to its existing NCR healthcare self-service kiosk, and then the vendor connected Adventist with a credit card processing partner to take care of the back end.

“This program takes the burden off our outsourced [collection] agency and it’s patient-friendly. It also reduces our overall expenses,” says Reiner, who estimates that Adventist has approximately 250 patients monthly using the recurring payment option out of the 2,400 patients who use monthly online payment.

The online option allows patients to set up recurring payments that extend up to 36 months with a minimum of a $50 payment each month. The patients’ credit card information is stored in the system and then automatically charged until the amount owed is fulfilled.

As a result, Adventist has increased collections by $150,000 per month while saving 6-10 cents on every dollar by avoiding using the “early-out” agency. Moreover, if there is refund due back to the patient, Adventist can refund the amount to the patient’s card, preventing the need to cut a check. Refunds via check cost an estimated $4-$7 versus the $2-$3 for using a credit card.

It’s such a simple addition, but with much of the low-hanging financial fruit from quick cost cutting gone, adding an online recurring payment option to your website may offer just one more opportunity to decrease bad debt and increase the bottom line.

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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