Hospitals' billing and payment processes are just ok — and financial executives know it

When it comes to billing and payment processes, nearly half of healthcare executives see the need to improve the patient experience.

Most hospitals and health systems see patient billing and payment as a strategic imperative, yet they report lackluster progress in making these processes more consumer friendly, timely and effective. Rare is the hospital or health system that considers its billing and payment process a modernized and precise point of organizational pride. Most financial executives say their organizations are simply doing so-so and 50 percent reported the need to improve the patient experience aspect of this process, according to new survey results from Cedar, a data-driven patient payment and engagement platform.

Nearly eighty senior financial leaders and executives participated in an online survey hosted by Becker's Hospital Review in partnership with Cedar from July 17 to August 1. The respondents included 28 C-level executives, 16 vice presidents, 24 directors and eight managers within health systems, academic medical centers, community hospitals, medical groups and children's hospitals across the U.S.

When asked to name the largest challenge their organization faces with patient billing, payment collections outweighed other billing issues by a significant margin. Other obstacles included outdated billing technologies, with 40 percent of respondents still using paper bills, difficulties with payers/insurers, and complex billing processes. Respondents also noted frustrations with inexperienced or untrained staff as well as internal politics and administrative challenges. The range of these responses suggests the challenges are aplenty as healthcare executives still struggle to help patients understand and pay their healthcare bills.

The survey delved further into one of the obstacles: patient financial responsibility. When asked to assess their organization’s efforts to address increasing patient financial responsibility on a scale of one to five — with one being the lowest, five the highest — 61 percent of respondents rated their organization with a three or lower. "We are just ok. Nothing we have in the pipeline gets us to exceptional," said the CFO of a hospital in the South.

Of the respondents who selected a rating of three or lower, several identified specific challenges, shortcomings or inactions that thwart their efforts to improve patient billing and payment. "We have done quite a few things to make it easier for patients to pay, however we need to help them better understand how much they will pay, including upfront estimates," said the vice president of revenue cycle of a $2.25 billion academic medical center in the Midwest. "We are not providing accurate insurance verifications for patients," said the CFO of a $2.2 billion children's hospital in the West. "We need more options to accept payments from patients. Adding mobile options will be helpful for our patients, especially those who are younger," said the CFO of a 119-bed hospital in the South. "We are not providing estimates and requesting payment upfront on all elective scheduled procedures," said the vice president of revenue cycle with a $4 billion health system in the Midwest.

It's worth noting that more than 51 percent of survey respondents said the patient billing and payment process is of highest priority — not a single respondent said it is low priority. Hospitals and health systems face no shortage of demands on their finite time and resources, so it's meaningful when the majority of executives rank patient billing and payment as a top organizational concern amid a long list of competing objectives. And yet even when an improved billing and payment process is elevated as an operational and strategic priority, hospitals and health systems are not making as much progress as they'd like in execution, which suggests deficiencies in objectives, resources and/or timing.

No hospital or health system is immune from the risk of slipping financial performance and ever-tightening operating margins. It is a baseline business function to collect on what is owed, yet doing so in a timely fashion is an arduous task for the majority of health systems today. Difficult-to-decipher bills and impersonalized patient outreach can make it difficult for providers to collect payments in a timely fashion. On average, 65 percent of respondents noted it takes their organization more than 60 days to collect patient payments, with 40 percent waiting more than 90 days.

How do patients feel about the billing and payment processes at respondents' hospitals and health systems? Middle-of-the-road, according to most respondents. When asked to identify patient satisfaction on a scale of one to five — with one being the lowest, five the highest — 56 percent of respondents rated patient sentiment with a three. The fact that only one respondent selected a score of five underscores the finding that hospitals and health systems have yet to perfect the billing experience for patients.

Even respondents who indicated patients are neutral (i.e., a rating of three) about their billing experience are nonetheless aware of how it falls short. "We need to further streamline and improve communication to our patients," said one vice president of revenue management with a health system in the West with $3.5 billion in operating revenue. Other respondents said patients are confused by bills — allowed amounts, how much they are responsible for paying and how statements are itemized. This perplexity can then be compounded when assistance is not readily available; several survey respondents said patients have difficulty reaching live agents and poor experiences at the front desk. As one vice president of revenue cycle with a $1.5 billion health system in the Northeast said: "We have not made it easy for the patient."

Hospitals and health systems find themselves in an interesting, frustrating position. No hospital prides itself on average clinical outcomes, care quality or research capabilities. Instead, these organizations and the dedicated professionals who power them reach for only the best clinical outcomes, preeminent care quality and game-changing research that cures diseases and extends lives. For such ambitious organizations to be weighed down by financial processes that they consider mediocre or average is problematic, especially since financial executives know exactly how these processes are falling short. It is one thing to be average yet unaware, it is another to be average and fully aware of how, why and where you could do better. Overall, the survey suggests most hospitals and financial teams find themselves in the latter position when it comes to their patient billing and payment processes. To learn more about Cedar and the survey results, access the full report here.


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