The 3 Big Factors That Make Patient Self-Pay a Headache for Providers

According to Healthcare Finance News, more than half of provider bills don’t get paid. And for every dollar billed to patients, providers have historically failed to collect 65 cents. Providers are experts at managing insurance reimbursement, but collecting self-pay dollars is a different story. With the average annual deductible for covered workers increasing 255% since 2006 and projected to continue this growth trajectory, providers are faced with a daunting challenge to remain profitable.

It’s a trend that’s not reversing – and it’s causing distress for families and CEOs alike. As patients are billed for more, a new system balancing their responsibility with their ability to pay has yet to emerge. The current system to collect money is largely broken. There has to be a better way.

Healthcare providers could learn a good lesson from retail giants like Selfridge and Wanamaker who understood that new and loyal customers would fuel their businesses. Satisfaction leads to trust, trust leads to loyalty, loyalty leads to community and community leads to growth. While it may have taken us a hundred years or so, healthcare finance is finally beginning to see how important that message really is: Patient satisfaction is key to your health system’s success. And satisfaction relies not only on the physical care you provide, but financial consideration.

In 2016, it’s accurate to call patients “customers.” That’s a top-of-mind issue for healthcare finance leaders. Heck, it’s a top-of-mind issue for insurers, employers and families too. High-deductible health plans (HDHPs) and HSA accounts may be at the root of this shift – they’re certainly driving the patient’s need for convenience and an improved healthcare experience.

These factors have helped to create three important challenges for the healthcare market:

• Growing, and more risky patient payment portfolios require new solutions for reimbursement. As a result, most hospital CFOs are contemplating more advanced technology and services, hoping to enhance their performance in a holistic fashion rather than incrementally. That’s obviously easier said than done: According to the Black Book research firm, about 2400 hospitals failed to initiate a sustainable RCM plan as of July 2015.
• It’s a fact that many patients have trouble paying their bills. It’s a problem that can’t be ignored: As employers push their associates toward HDHPs, and as insurance policies pay less, patients are struggling to respond to the bulging and often unexpected debt. Historically, providers received about 90% of their reimbursement from insurers. But as more households find themselves under HDHPs, it isn’t out of line to assume the ratio could shift to nearly 30% from patients. The result? Self-pay portfolios today are larger and riskier than ever.
• Dealing with the compliance requirements to tackle those two issues is a complicated matter. Many a healthcare provider has been taken to court over their contact methods and financial practices. Telephone Consumer Protection Act (TCPA) risk has grown as new technologies and modes of consumer communication have brought antiquated legal language to bear. And the Consumer Financial Protection Bureau (CFPB) has its sights set on the healthcare industry, applying many of the mandates it has typically reserved for the collection industry.

We’re left with a foreseeable future where patients will play an important role as healthcare service consumers or, ahem, customers. So what steps should be taken to help self-pay patients meet the shifting financial obligations imposed by their care, in a way that encourages their financial well-being and overall satisfaction?