Crowe Horwath: Hospitals should anticipate more self-pay, less revenue under healthcare reform

The future of the GOP healthcare bill to repeal and replace the ACA is uncertain, but expected changes proposed thus far indicate a rise in self-pay patients as the number of uninsured people increases, which translates to less revenue for hospitals, according to a report from national accounting and consulting firm Crowe Horwath.

For the study, Crowe, which has implemented its Revenue Cycle Analytics solution in more than 850 U.S. hospitals, used its benchmarking database to examine a sample portfolio of 357 hospitals in Medicaid expansion states as of this year. The firm looked at performance since 2013.

The firm found hospitals in Medicaid expansion states saw an average increase of 6 percent in patients covered by traditional and managed Medicaid. The average Medicaid payer mix went from 12.3 percent in these states in 2013 to 18.3 percent in 2016. During the same time period, the states saw self-pay payer mix decrease 3.87 percent, from 7.39 percent to 3.52 percent.

"With changes to healthcare legislation looming, hospitals need to prepare for a return to a higher percentage of self-pay patients. Our data shows that for the average hospital, every 2 percent payer mix shift from Medicaid back to self-pay results in a 1 percent reduction in overall net revenue," Brian Sanderson, managing principal of Crowe healthcare services group, said in a prepared statement. He also pointed to the effect on hospitals' cash flow. According to Crowe, the average self-pay patient account stays in accounts receivable for 96 days, compared to Medicaid balances, which stay in accounts receivable for 64 days.

Additionally, Crowe noted in its study the rising popularity of high-deductible health plans. The study estimates the average hospital in a Medicaid expansion state could see their self-pay payer mix increase by 4.2 percent with both a repeal of the ACA and the rise in popularity of high-deductible health plans. Crowe said this is expected to lead to a 2.8 percent decrease in total net revenue for these organizations.

Crowe provided some best practices for hospitals to improve self-pay collections. These include: "tools and techniques to quickly determine a patient's ability to pay," as well as "creation of multiple pathways for payments" and "pricing transparency."

 

More articles on healthcare finance:
Bankrupt Arizona hospital asks court to end levy for Medicaid expansion
W.Va clinic receives $2M grant
Mercy Health System adopts new billing system

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