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Accelerating Collections in the Healthcare Industry

By | September 11, 2014

Providers are now faced with collecting more from patients but many still rely on systems and procedures designed for an old paradigm.  There is a better way. 

The cost of collections is a problem in many industries and, while relatively new to this segment, it is particularly acute in healthcare.  In the past, providers received nearly the entire payment for patient care from a third party payer – an insurance company.

While the Affordable Care Act has added millions to the insurance rolls, factors like rising healthcare costs, a reduction in employer-provided insurance plans, more patients choosing high-deductible health plans (HDHPs), and an increase in plans charging coinsurance for office visits has meant an increase in the patient-owed portion of the medical bill.  Providers are now faced with collecting more from patients but still rely on systems and procedures designed for the old paradigm.

Why collections are inherently slower in healthcare

There are several factors unique to healthcare billing that make it unlike other industries and more complicated for patients.  First, healthcare bills tend to be sporadic rather than recurring so patients are less likely to have medical expenses included in their monthly budget like they would for their utility bills.  A lack of transparency in the cost of care or knowing how much will be reimbursed prior to treatment leaves patients in the dark as to how much they’ll owe.  Finally, the fact that patients receive documents and bills from multiple parties (e.g. an EOB from the insurance company and a bill from the provider for the patient-owed portion of expenses) causes many patients to delay payment until they receive and review all documents and bills for their episode of care.

Additionally, many provider organizations suffer from systems that require extensive manual input or that perpetuate redundancy and inefficiency.  For example, it is standard practice in most offices to wait weeks to mail a patient bill and then send multiple paper bills and requests for payment before receiving payment from the patient.

Consumer research done by consultants McKinsey & Company found that patients aren’t necessarily unable or unwilling to pay their medical bills, but that lack of financing options, inefficiencies in billing practices, and consumer confusion are all major drivers in payment behavior.

Accelerating collections by reducing the complexity of patient billing and providing more payment options

A general strategy for the healthcare industry should be to focus on efficiency and practices that reduce manual processes while giving patients more options to pay their bills, including electronically.  According to the U.S. Healthcare Efficiency Index (revised May 2014), over 40 percent of claim payments continue to be made by paper checks.

Reducing an over-dependency on paper communication and billing, and mitigating the inherent lag time in collections caused by patients delaying payment until they review all mailed documents, are two areas that can easily be addressed.  Offering patients a way to pay online or from their mobile device accelerates payments.  Sharing a HIPPA-compliant digital file cabinet speeds delivery and gives patients an uncomplicated, automatic way to receive and archive documents in one place.

The time is now

McKinsey & Company called for a “greater ‘electronification’ of healthcare transactions” back in 2007.  In a 2010 report the firm lamented that the “overhaul” was still not widely achieved but they continued to, “…believe that major change in the payments landscape is inevitable because of fundamental industry dynamics, such as the proliferation and increasing complexity of health care transactions, the increasingly prominent role of the consumer in payments, and the rising importance of medical and financial risk management for providers.”

With inherent complexities in the healthcare billing ecosystem and initiatives like EHR adoption and ICD-10 compliance competing for resources within the practice, providers are hamstrung if collection cycles are unnecessarily slowed.  Deploying a solution to help patients untangle the complexity of their bills and make payments faster will have immediate and lasting impact on cash flow and the ability to grow and innovate the provider’s practice.

The collections problem is real for healthcare providers but electronic billing and payments along with secure document sharing and storage offer a huge opportunity to speed collections.  The solution exists today and it can be deployed quickly and affordably with minimal IT resources.  Want to see if doxo can help your organization get paid faster?  Get in touch at sales@doxo.com.

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