Hospitals that don't tackle patient self-pay shortcomings could face worsening bad debt problem

With the rise of high deductible health plans and increasing healthcare costs, hospitals could face a cash flow crisis if they fail to address patient self-pay shortcomings, according to new research from Boston-based Aite Group.

The research was based on data collected via Aite Group-sponsored consumer research and Aite Group interviews with industry executives across treasury banks, payments networks, claims clearinghouses and revenue cycle analysts.

According to the research, patient payments to hospitals will increase at a compound annual growth rate of 10 percent from 2015 to 2019, compared to the 6 percent self-pay rate of the healthcare industry as a whole during that time period, according to Health Data Management.

"Patient self-pay growth is a call to arms for an industry fighting with its third-party payers to recoup payment," the report states, according to Health Data Management. "Hospitals must combat patient-collection challenges looming on the horizon or grapple with the reality that another third party [in the form of consumers] will adversely impact their business in the form of increasing bad debt write-offs."

Mike Trilli, senior health insurance analyst at Aite Group, said hospitals that don't address patient self-pay shortcomings can expect a nagging bad debt problem to get worse before it gets better.

According to Health Data Management, Mr. Trilli said hospitals must devise ways to outsource collections that enable them to get paid and effectively allows third parties manage the collection relationship. Also, he pointed out that hospitals can avert a cash flow crisis if they ramp up initial point-of-service and bill pay investments for a patient experience that promotes the patient's use of digital self-servicing channels, according to Health Data Management.

The report projects that mailed payments will steadily decrease from 68 percent of all hospital bill payments in 2015 to 56 percent in 2017 and 40 percent in 2019. Additionally, PC-mobile browser bill payments are projected to increase from 18 percent in 2015 to 26 percent in 2017 and 40 percent in 2019, while phone-based payments are projected to increase from 8 percent in 2015 to 12 percent in 2017 and 14 percent in 2019. In-person payments are expected to remain steady at 6 percent.

Still, according to Health Data Management, the report points out that online bill payment does not solve the patient bad debt issue by itself. "Providing this convenience to patients translates to increased bill payments volume, however," the report notes.


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