Rising Bad Debt Makes Patient Collections a High Priority

Almost half of hospitals senior executives responding to a recent Transunion survey reported a marked (between 6 and 10 percent) growth in bad debt over the past 18 months. Over 25% realized between 11 and 20 percent growth in this key metric.

Other key survey findings include:

– Consumer Directed Healthcare Plans are a source of concern for hospital administrators. Almost 80% believe they will be a significant source of additional bad debt by the end of 2010.

– Hospital executives are spending a lot of time worrying about patient collection issues. Improving patient collections was the number one priority for over 40% of executives. Close to 20% have focusing on lowering bad debt as their top goal.

It is there therefore supremely important to collect well from the patients. Clinics and practices need every tool available (basic and advanced) to streamline what is otherwise a very labor-intensive task:

– Better use of on-line electronic payment tools. The latest tools can make it easy for you to accept practically any form of payment on-line and for patients to pay in a self-serve manner.

– Do not allow you credit card readers to be a bottleneck. The latest ones are inexpensive (since they are software based and hook up to a front desk PC). You should have at least two both for backup purposes and to facilitate taking payments from multiple patients at once. In addition, try and use one that converts checks to electronic payments for almost instantaneous processing of checks.

– Establish a consistent policy on whether you’ll reschedule these patients or let them see the doctor and mail in their money later. If you choose the latter route, make it easy for patients to remember their responsibility. Hand them a self-addressed envelope marked “COPAY-URGENT”.

– Use a tiered approach to patient collections and match the collection effort not with the patient balance but with the expected payment. Credit Cards use this technique through the use of credit score. They know that a $2,000 balance on a consumer with a credit score with 720 is worth more to them than a $3,000 balance on a consumer with a score of 600. You can use this approach by looking at patients past payment patterns, healthcare credit scores (there are services that provide these) and/or employment status.

– Track how well your front desk staff collects co pays and coinsurance. Reward and discipline accordingly.

Follow these steps and you can side step the bad debt train wreck.

Copyright 2008. Carl Mays II