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Self-Pay and the Bottom Line

Karen Minich-Pourshadi, for HealthLeaders Magazine, May 12, 2010
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In addition to this registration screening tool, the facility also uses SSI/SSDI Outreach Access and Recovery, or SOAR, a software provided by a Delmar, NY, company that concentrates on qualifying homeless individuals in need of care.

"Since we launched this 18 months ago, I've gotten less than five complaints. I think the key is how you approach the patient. We aren't twisting arms and legs. We approach them in a respectful and informative way," he says.

The new software enables the team to give the patient a more accurate estimate of the bill and the out-of-pocket copay. Though New Hanover Regional had been doing estimates for years, the accuracy of the estimates was much lower, and thus so were its collections. "Today it's much more refined and we get much closer; the accuracy has made a difference."

A fresh approach
The University of Virginia Health System, an academic medical center in Charlottesville, VA, also is looking into more proactive approaches. Larry Fitzgerald, CFO, says that in the past two years the 613-staffed-bed facility has seen growth of 12% to 13% in its charity care. Perhaps more disconcerting, Fitzgerald says, the percentage of gross revenue from self-pay patients in the first seven months of their fiscal year, ending June 30, hit 8.1%, up from a previous year-end total of 7.6%.

"In the last year, we've had self-pay patients who never thought they would be self-pay patients—but they lost their jobs and don't have insurance," he says.

To offset the influx of patients and to try to keep costs steady, Fitzgerald says the medical center is actively encouraging patients to use free clinics for nonurgent care and is looking for other opportunities to get to the problem at the source, before it gets to the bottom line.

"Right now we are analyzing the possibility of developing a primary care clinic for uninsured patients," he says, though this is still in the research phase. "These patients tend to come to the emergency department for things that could be treated in a primary care setting, and doing so would probably end up saving the hospital money."

Though it has managed to maintain a collection rate of about 20 cents for every dollar owed for self-pay patients, the University of Virginia Health System would like to see the dollars or patient levels shift in their favor. So it is seeking as many avenues as possible to change that, from the free primary care clinic to becoming an accountable care organization. "The numbers are rising; you have to look at new approaches," adds Fitzgerald.


Karen Minich-Pourshadi is senior editor for finance for HealthLeaders Media. She may be contacted at kminich-pourshadi@healthleadersmedia.com.

Four Strategies for Stronger POS Collections

The financial leaders we spoke to regarding self-pay collections all approach point-of-service collections differently for self-pay patients. However, most had similar strategies for the basics, including:

  • Screen patients. Use your hospital's technology to screen a patient's account upon registration. If you don't have this technology in place yet, there are numerous vendors who provide it. Be sure you have established a policy and procedure for doing so.
  • Classify patients. To receive the highest payment with the lowest account aging, you need know what programs your patients may be eligible to receive—anything from Medicaid to auto insurance policies. There are numerous third-party technologies that can assist your teams in this process, and investing may be worth the cost, as it can help offset your uncompensated care losses.
  • Follow your mission to margin. Identifying charity care patients and enrolling them in the appropriate programs helps facilities fulfill their mission and it also helps your team identify which patients should be offered discounts based on your facility's charity care policies. Be sure to screen clients upon admission and after the fact if there are remaining balances.
  • Make educated assessments. Using an automated tool to screen your clients and check credit scores can help your staff better assess the likelihood that a patient will pay, and whether it will be in a timely manner. Consider creating scripts that address different levels of patient payment type (e.g., one for high likelihood of payment and another medium and another for low). Each level of payment likelihood will guide your team members in their up-front downpayment collections and level of financial counseling.
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