The New Collections Challenge

As more patients gain insurance coverage through health plans with a significant cost-sharing obligation, hospitals and health systems search for ways to protect revenue.

This article first appeared in the November 2014 issue of HealthLeaders magazine.

The health insurance exchanges are providing more coverage opportunities for consumers, but the high deductibles associated with many of the plans—up to 40% in some cases—are causing new collections hurdles for hospitals and health systems. Additionally, many employer-sponsored health plans are moving to higher deductibles as a way of shifting more financial responsibility to employees. As patients become increasingly accountable for paying for their own healthcare, provider organizations need strategies to ensure that the self-pay portion of a medical bill does not become the no-pay portion.

Medicaid expansion helps, but not enough
Ronald Knaus, senior vice president and chief financial officer at Spectrum Health System based in Grand Rapids, Michigan, says that while charity care costs are down thanks to the state's expanded Medicaid program, the financial boon is not enough to offset the rise in patients with high-deductible health plans. Spectrum Health is a not-for-profit system with 11 hospitals, 1,938 licensed beds, and total annual operating revenues of about $4.1 billion.

"We have had expanded Medicaid now for roughly four months, and we are seeing, at least in west Michigan, more folks that have insurance, mainly in the form of Medicaid, so our self-pay population has declined. Previously, our charity care was about 1.5% of our revenue, but now it is at 0.4%, so it has gone to about one-third of what it had been," Knaus says.