Healthcare CEOs: Get Ready for the Haters

Patients are already facing copays, coinsurance, and deductibles that are much higher than only a year or two ago. If you think they're unhappy now, wait until you see what happens when you try to collect their share of your payment directly.

New headlines this month have focused on how difficult, if not impossible, it is to shop for health insurance through healthcare.gov, the online clearinghouse for the uninsured who want to sign up for Obamacare.

Those problems will eventually get fixed, and if I know the government, the solution will involve throwing gobs of money.

But let's think forward for a moment. Regardless of how the drama of the health insurance exchanges' operability plays out, eventually a lot of people who didn't have insurance before will gain it. One potential problem: the quality of that insurance shows every sign of declining across the patient population.

If your life depends on getting paid in full for your work, and most hospitals' lives do depend on it, that task will get much more difficult.

While it's good that many people who once were uninsured will now be covered, what is the quality of that coverage from a collectability standpoint? Many, if not most, who sign up through the exchanges will be choosing the cheapest plan available, known as the bronze plan.

It remains to be seen how many "healthy" people will sign up. And even those who are fortunate enough to hang onto their employer-provided health insurance plans may find out that their plans are little more than bronze as well. This is part of a recent trend with employer-based plans, where patients are already facing copays, coinsurance, and deductibles that are much higher than they were only a year or two ago.

If you can't collect the patient's share of payment effectively, you're in trouble.

That puts hospitals, the place where care is most expensive, in a difficult position. If they want to be fully paid for their work, and if they want to fulfill their contracts with health insurers, hospitals are required to collect these growing amounts of cash directly from patients.

They've been getting better at it, but a side effect of this change they haven't counted on until recently is a level of hatred, and at least as importantly, payment resistance, from patients.

I use the strong word "hatred" because when I was talking to a CFO about this problem in August at the HealthLeaders CFO Exchange in Colorado, he used that word when we talked about his organization's efforts to collect the patient's share of hospital payment.

To be sure, the trend of greater patient financial responsibility for their healthcare is not necessarily driven by Obamacare. In fact, it's chiefly driven by the fact that health insurance deductibles, coinsurance, and copays have been seen by employers and payers for a few years now as the last best hope to get a handle on the growth in healthcare costs.

The theory is that patients will begin to ration their healthcare and shop for the best price because they're more responsible for the cost. Well, that may happen, but other negative consequences of this trend are less immediately apparent. Sometimes, they just can't, or won't pay.

One consequence, this CFO argued, is that patients begin to blame the hospital for the crushing level of healthcare costs for which they are now responsible. This makes them less likely to pay than ever.

In any case, the CFO and several of his colleagues agreed that hospitals will likely be the focal point of hatred from patients simply because they're trying to collect on a bill that used to be paid by someone else.

In most cases, patients find out about the huge share of the cost of care they are responsible for from the hospitals themselves. So it's at least partially a case of 'blame the messenger.'

Patients have signed their benefit forms, and they've signed up for insurance, but little do they know that they've gone from a $500 deductible to a $5,000 one. All of a sudden, a trip to the hospital and they have to come up with thousands of dollars to pay the bill. And they haven't budgeted for it.

Many hospitals are already suffering from huge bad debt burdens. Hospitals are at the end of the chain; they're the ones trying to collect the balance, and they have to explain to the patient why that is. It's not an easy conversation. And woe to the hospital that can't collect the patient's portion of the bill prior to service. It's certainly not easy to collect it after.

What hospitals are really left telling many patients is that they have poor insurance. Their coverage is little more than a catastrophic plan. Much of the rest is up to your patients and their employers, who are stuck with skyrocketing rates for that catastrophic coverage.

They're in for a rude awakening, and it's not your fault. But they'll be blaming you.