Debunking 5 myths about patient financing

KaLynn Gates, President and Corporate Counsel, HealthFirst Financial - Print  | 

Patients are leaving a huge hole in providers’ bottom lines: They now are the third-largest responsible payor after Medicare and Medicaid but 68% with medical bills of $500 or less did not pay off the full balance during 2016, up from 49% in 2014, and headed to 95% by 2020, according to a June 2017 TransUnion analysis.

What’s surprising is the limited response of providers to this unsustainable situation. Some have taken initial steps: requesting payment upfront, improving billing statements, helping patients enroll in Medicaid and insurance plans. But that’s not enough to reverse this alarming non-payment trend.

Like many consumer companies from Home Depot to Toyota, the answer for providers seems clear: Offer no- or low-interest installment payment programs so patients can get needed care and pay in affordable amounts over time.

Not only would this increase volume and total collections but it builds patient satisfaction, goodwill and loyalty. So why has healthcare been slow to adopt patient financing? Below are five myths that may be holding you back.

Myth: We’ve never had patient financing so we wouldn’t need it now.
The healthcare revenue cycle has changed dramatically, requiring new approaches. Out-of-pocket costs for patients have skyrocketed, with 51% of covered workers in 2017 having an annual deductible of $1,000 or more for single coverage, up from 34% in 2012, according to the Kaiser/HRET Survey.

Now more than half of American adults say they’d have trouble paying a medical bill of more than $500, according to the 2017 HealthFirst Financial Patient Survey.

The math is pretty clear: While millions of people are obliged to pay more of their medical care, they don’t have the money. For healthcare providers this means:
1. Write off more bad debt and cut spending, or
2. Implement solutions, like patient financing, that make care affordable for patients while helping ensure providers get paid for their services.

Myth: No- or low-interest financing doesn’t improve our financial performance.
Actually, providers significantly improve their financial performance with some types of patient financing. A national health system, for example, saw bad debt diminish by 10% and self-pay A/R decrease by 20% after implementing their patient financing program.

What’s more, some patient financing firms immediately fund the patient balances, minus the service fee, improving cash flow and reducing A/R days. A multi-specialty medical group with more than 140 physicians received $245,000 upfront after going live with their patient financing program, and that figure nearly doubled to $450,000 after its second year.

Myth: Implementation and administration will be a nightmare.
It doesn’t have to be. Implementation complexity and times vary widely. Some programs are complete hand-offs to a third party with no impact on your IT systems and your staff simply gives out information. Then it’s up to the patients to apply online for loans that require strong credit scores.

Other financing programs that accept all patients referred by providers can be up and running in 30 days or so. The program should also make staff’s lives easier and involve a straightforward, step-by-step implementation process. This includes a checklist that covers how accounts will be transferred over, funding setup, and any technical requirements.

In addition, patient financing leaders manage the administration and customer service, allowing your revenue cycle team to handle other priorities, and some offer real-time performance reports and access to recorded calls with patients.

Myth: C-level executives aren’t interested in patient financing.
Top leadership often isn’t aware of the extent to which patient financing can enhance the organization’s standing with patients and in their communities while helping improve their bottom line. Revenue cycle executives find that also emphasizing the impact on patient satisfaction is extremely persuasive to senior management. Patients satisfied with their medical billing experience are five times more likely to recommend a hospital and two times more likely to recommend a physician than those who were not, according to predictive analytics firm Connance.

Myth: We lose control if we bring in third parties.
That depends on the service provider chosen. Some financing firms work with each provider to establish and implement specific terms and policies for the organization’s payment programs rather than have them choose from a limited portfolio of payment plans. How the payment plan is administered and how the financing firm handles customer service also can make a big difference in satisfaction for patients and revenue cycle employees as well as total collections.

Providers and their patients can no longer afford to let myths about patient financing hold them back. The old ways of managing the revenue cycle need to give way to new approaches that fit the reality of who’s paying. Healthcare providers that want to thrive in this new economy will need to use a multitude of options, including patient financing, to stay competitive and financially viable so they can fulfill their mission to serve their communities.

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