Is Your Billing and Collections 'Small-Town' Enough?

Millions of dollars go into customer service programs to help healthcare organizations treat their customers like their neighbors. Healthcare providers have come a long way in enhancing the patient care experience in certain parts of the healthcare continuum such as the doctor's visit or the hospital stay. However, there is still a lot of drag when it comes time to collect payment.

For all the new billing systems and consultants focused on helping hospitals manage the revenue cycle more efficiently, industry folks I talk to tell me that a lot of bills still go out to third-party collection. We can all agree that this is a necessary part of doing business for a small percentage of bills coming through the back office. But, I wonder if a large percentage of organizations send out to third-party collection because it is easier and less costly than finding the resources to change systems, train staff and implement programs that enable better segmenting of patients on the front end of the visit. This in turn, of course, makes it easier to move patients onto an appropriate payment plan or into charity care. We all know that third-party collections have a terrible ROI that in the future will offer less and less value as hospitals see increasing numbers of self-pay patients who are uninsured, underinsured or who have high-deductible health plans. Plus, they are just plain bad for the brand.

While a number of hospitals and health systems are implementing pressure-free and patient friendly payment programs to try to improve billing and collection practices, do they pass the small-town test? One of the most important aspects of running a business—providing good customer service—I learned in my home town, population 2,000. During high school, I worked the soda fountain and cash register at the local drug store, the place that tourists and locals congregated in a no-stoplight town. Here I learned that you can never live down bad service because the odds are stacked against you that you will run into the recipient of that service at the deli or the gas station, or they will tell your mother.

They will also tell their friends and their friends and their friends. The effect is immediate there, but it takes longer, for example, if you are a hospital in a community of a half million, like Nashville, where I live today.

Hannibal Regional Hospital in Missouri, a community hospital with 105 beds, uses a few billing and collection practices from which we can all learn. I have to admit that when I spoke to Steve Keppner, group director of patient financial services, I identified with his approach because it was based less on implementing new programs, and focused more on being a good citizen in a small community. Five years ago, the hospital's business office invited community members to a forum to talk about the hospital's billing practices. "We learned from them that it wasn't about what the bill looked like as much as how we managed that bill," recalls Keppner.

What has unfolded in the last several years is an operation front to back that doesn't see much in third party collections, says Keppner. The hospital maintains 45 AR days, down from 80 a decade ago. "Maybe 5% or 10% of hospitals can maintain days this low," says Keppner, noting that the hospital implemented a QuadraMed system in 2003 to help manage several areas, including patient registration, accounting, and scheduling.

Another important investment for the hospital has been its back-office staff of 18, he says, which has seen very little turnover. Three of the 18 are financial counselors, a number he says may be higher than "most facilities."

Here are three practices that have worked well for the hospital in being a good neighbor and employer:

Help patients with low benefits understand their bills: Patients know what their portion of the bill will be at the time of their visit. "There is kind of a peace of mind in knowing I have a $5,000 bill coming and my insurance will pay all but $1,000 vs. just going through the normal process and saying you owe $1,000 at the tail end," says Keppner. Financial counselors also help patients sign up for Medicaid and other programs to help pay their bills, or when appropriate they are moved into charity care.

Keep it in-house: "I believe we should be doing everything in house because these are our patients," says Keppner, referring to the practice of sending out different parts of accounts receivable management to third parties. "We are in a little community in northeast Missouri where some of these people are our neighbors and families. I don't want to send their bill to a firm when I should manage their accounts to the best of my ability."

Create an environment where people will want to stay: Hannibal Regional is invested heavily in helping registration and billing employees improve their skills. "Most of our employees have received national certifications," says Keppner. He notes that as part of their job description employees are expected to obtain certification from either AAHAM or NAHAM. "We have had real good success and it helps them develop extraordinary skills," says Keppner. "Instead of 'I just do this,' now they understand the whole revenue cycle, including what happens before them and after them."