Floyd Medical Center has found success with a payment plan program that pays the entire patient balance upfront, reducing days in AR and keeping cash flowing.
As patient out-of-pocket costs increase, payment plans—especially ones that are interest free and don't require a credit check—are becoming the norm for hospitals and health systems who want to put patient experience at the center of the revenue cycle.
"I've always believed that people really want to pay their bill, but there are struggles that happen in life," Rick Childs, vice president of revenue cycle management at Floyd Medical Center in Rome, Georgia, tells HealthLeaders.
That's truer now than ever before, as COVID-19-related job losses collide with already skyrocketing deductibles.
Floyd Medical Center serves a six-county, mostly rural population comprised of "hard-working people who just need time and a favorable means to make those payments," Childs says.
That's why Floyd Medical Center has adopted a solution that's not only favorable to patients, but also to the organization through a program that pays the entire patient balance upfront once the patient starts making installment payments on their plan.
"It's beneficial to me, but it's beneficial to the patient," Childs says. "That's the biggest win. We're able to not only help them clinically, but we've been able to help them get through the expense of healthcare."
Weighing payment plan options
When it comes to deciding how to offer payment plans, providers have several options. Plans might be outsourced, handled in-house, or a combination of the two. They might be completely interest-free or start to accrue interest after a certain number of months. How the programs are funded varies as well, ranging from internally funded loan programs to medical credit cards.
Floyd Medical Center has opted for a recourse program through the Nashville-based patient financing company CarePayment, in which the organization is paid upfront for the patient balance portion of a patient bill. In doing so, the medical center has increased its private pay collections by 68% since it first implemented the program in the third quarter of 2017.
Benefits to patients and providers
According to Childs, Floyd Medical Center's program reduces accounts receivable and improves cash flow, something that's been especially important during the COVID-19 crisis. It also cuts expenses related to sending patient statements and keeping in touch with patients who still owe money.
"I've got that payment that may take two or three years to get here if I'm doing that myself," Childs says. "It's just a much more fluid process for us and more timely. Typically, the days in AR for hospitals can range from the 40s … up into 80–90 days to get paid on average."
Instead of payment plans with Floyd Medical Center, patients work directly with, get their statements from, and send payments to CarePayment. With the program, patients receive an interest-free revolving line of credit at 0.00% annual percentage rate. The program doesn't require an application, doesn't impact patient credit scores, and doesn't report delinquent accounts to credit bureaus.
Floyd Medical Center gets paid immediately for the full patient balance—less the fees for using the service—as soon as the patient makes their first payment.
"When [patients] make that first payment, CarePayment will fund that account to me," Childs says. "They will pay that balance, so, in my AR, that account's already paid off. As long as [patients] make their terms, I don't have to do anything else."
If patients don't fulfill their financial obligations, CarePayment will send the balance back to Floyd Medical Center, where it will go into the usual collections process, but Childs says usually that doesn't happen. In fact, it happens only 6% of the time when patients choose to enter the payment plan upfront.
"Our recourse is pretty small [among] most people once they've engaged" with CarePayment, he says. "If they make two payments, [patients] typically pay out."
How patients are enrolled
There are two ways that patients can get enrolled in the program. The first is called "Patient Choice," where patients chose to engage in a payment plan upfront. Childs told HealthLeaders by email that Floyd Medical Center has seen a 58% increase in collections among this group of patients since starting the program.
The second is called "Patient Assign." If patients don't respond after receiving two statements, CarePayment will intervene to initiate a payment plan.
"The norm would have been one more statement and if [there's] no response it would go to collections," Childs said by email.
Patient collections among that group have increased 129%, he said.
As noted above, the recourse rate for the Patient Choice group is small: just 6%. It's higher for the Patient Assign group—25.3%—but still relatively low, considering this group had ignored statements.
Patients stay enrolled in the program even after their bill is paid off, making it easy to add another balance down the road, if needed. Patients can also roll additional bills into a single payment.
In addition to increasing collections, the payment process is more streamlined and customer service is better, Childs says. Before working with CarePayment, Floyd Medical Center's efforts were spotty.
"We had always been very limited with collections staff for self-pay," he says. In fact, there was just one person handling outbound self-pay collections when Childs became Floyd Medical Center's first vice president of revenue cycle in 2015, he says. Outsourcing the work wasn't a good solution, either.
"The results weren't a whole lot better, but our complaints were higher," Childs says.
Now, CarePayment's call center handles patient payment plans, and patients can get statements electronically and receive text reminders when it's time to make a payment. Customers are more satisfied, too.
"Complaints are virtually nonexistent," Childs says; less than one half of a percent.
Childs says offering the program is all about giving patients options and making things as easy and stress-free for them as possible.
"You've got to have flexibility and have different options because different people want to handle things in different ways," he says.
Alexandra Wilson Pecci is an editor for HealthLeaders.