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Uninsured Patients Drive Most Self-Pay Revenue at Hospitals

Analysis  |  By Jack O'Brien  
   December 13, 2018

The increasing number of uninsured patients has contributed to higher self-pay revenues for hospitals, according to a new study from TransUnion Healthcare.

Thirty percent of self-pay accounts, comprised primarily of patients who are uninsured, have generated 80% of self-pay revenue for hospitals, according to a TransUnion Healthcare study released Thursday morning.

Both the amount of uninsured patients and those with balances after insurance (PBAI) have risen consistently in recent years, even after major provisions of the Affordable Care Act have gone into place. The rate of uninsured patients topped 12% in 2017, according to the study, while the PBAI rate rose from 8% in 2012 to 12.2% in 2017. 

The TransUnion report also states that due to the recent rise in the rate of uninsured patients, hospitals could be missing out on potential financial opportunities due to lacking revenue cycle operations. Instead of writing off small amounts of self-pay accounts as bad debt, health systems could find opportunities to bill for services. 

Related: Improving Self-Pay Collections, One Proactive Approach

The study also calls for hospitals to reorient their efforts from exclusively focusing on cost-cutting to an embrace of optimizing revenue cycle operations, which could save the average 350-bed hospital about $22 million, according research cited by TransUnion. 

Related: Rising Uninsured Rate Expected to Stress Margins of Nonprofit Providers

Dave Wojczynski, president of TransUnion Healthcare, told HealthLeaders that there are multiple avenues outside of traditional cost-cutting to optimize the financial processes of the system, especially around revenue cycle operations. Wojczynski encourages systems to implement a two-pronged optimization strategy on the front and back end of their revenue cycle operations in order to fully realize missed revenue opportunities.

Focus on front-end changes revolve around patient engagement and the financial experience for the consumer, according to Wojczynski, such as promoting price transparency on procedures, out-of-pocket cost estimates, and collecting a portion of the patient balance upfront in the cycle. 

"There's a lot of screening tools, identity verification, insurance eligibility benefit checking, and understanding a patient's ability to pay their bill," Wojczynski said. "These all factor into towards having a good optimization effort on the front-end of the revenue cycle."

The back-end changes primarily focus on being able to collect on patient accounts that systems previously regarded as bad debt and subsequently wrote off. While navigating through volume is a challenge, Wojczynski said systems should focus on patients that may not have had coverage at the time of a procedure but became retroactively qualified in the weeks and months afterwards, such as through Medicaid enrollment. 

Related: How IU Health Slashed Self-Pay By Adding Financial Advisers

Wojczynski said that health systems should anticipate higher PBAI and uninsured patient rates going forward considering the elimination of the individual mandate passed in last year's tax reform bill. He added that in addition to the revenue cycle optimization measures, systems should also place an emphasis on improving the patient experience with upgraded payment plans and charity screenings on patients. 

Related: Posting Self-Pay Prices Mitigated Costs For a Phoenix Hospital

This article has been updated to include commentary from Dave Wojczynski, president of TransUnion Healthcare.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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