How to develop a winning self-pay strategy

With the rise of high-deductible health plans, a growing portion of hospital revenue comes directly from patients. The growth in self-pay accounts has hospitals across the nation exploring ways to improve front-end collections.

This content is sponsored by Waystar 

Five to 10 years ago, hospitals relied on commercial and government payers for the bulk of their revenue, and reimbursement was largely a business-to-business process handled on the back end. This is no longer the case. Today, nearly half of patients under 65 have a high-deductible health plan, and the financial health of hospitals and health systems is increasingly dependent on front-end collections.

"Overall, patients are now the largest source of revenue outside of Medicare and Medicaid,"Brett Hoium, product marketing and integration strategy manager at Waystar, a healthcare revenue cycle company, said during an executive roundtable at the Becker's Hospital Review 10th Annual Meeting in Chicago.

As patients continue to shoulder more financial responsibility for the cost of their healthcare, it's vital for hospitals to adjust their revenue cycle strategy and rethink the way they manage front-end collections.

During the roundtable, Mr. Hoium discussed why relying solely on back-end collections is not an optimal strategy for managing self-pay AR. He said trying to collect from patients on the backend is two times more costly than trying to collect from a payer, and the likelihood of collecting from patients decreases over time. In fact, a hospital's yield rate on patient revenue decreases 30 percent every 30 days, according to Mr. Hoium.

To prevent reimbursement from decreasing as the self-pay population continues to grow, hospitals must help patients anticipate, manage and track the costs of their care and give them flexible payment options.

Personalize the payment process

Hospitals will see their attempts to improve front-end collections fizzle out if they try to group all patients into the same financial bucket. Effectively managing accounts receivable requires hospitals to personalize the financial experience by taking into account each patient's financial situation.

Propensity to pay and presumptive charity software enables hospitals to financially triage every patient. These tools use a patient's visit information, historical financial performance, public data, and predictive analytics to determine a patient's ability to pay. This analysis also helps hospital staff identify patients who would benefit from a personalized payment plan, a consultation with a financial counselor, or qualify for charity care.

"You would really be shocked at the number of people who have insurance but still qualify for our financial assistance," the vice president of revenue cycle at an eight-hospital system in the Midwest said during the roundtable discussion.

Providing information about opportunities for financial assistance and basing payment options on a patient's financial reality can help hospitals improve patient payments. However, many hospitals still have work to do when it comes to these offerings.  

The executives who participated in the roundtable discussion agreed that their organizations would benefit from using propensity to pay software on the front end of the payment cycle, but few are doing so. Less than 10 of the more than 30 executive attendees at the roundtable said their hospital or health system is currently using these tools on the front end.

Empower front-end staff to drive revenue cycle performance

Propensity to pay and presumptive charity tools help hospitals place patients in the correct financial bucket, but that is only one step in the process. Effective management of accounts receivable also requires empowering front-end staff to discuss costs and payment options with patients.

"The human connection element on the front end is key, because then patients don't feel alone," the chair of the physician leadership network at a two-hospital system in the Northeast said during the roundtable. "Patients are so scared about this topic, especially with the amount of bankruptcy associated with healthcare debt."

Preparing employees to have financial conversations with patients requires an additional level of training, but the extra effort pays off for most organizations.

"That's been a primary reason why we've improved our front-end collections," the vice president of revenue cycle from the Midwest health system said. "Primarily because of the training, the scripting, the monthly feedback sessions."

In addition to staff training, hospitals must take steps to ensure patients feel comfortable talking about their financial situation and insurance benefits with a hospital representative. A health system in the Southeast made a simple change to help put patients at ease.

"We changed everybody's title," said the chief nurse specialist at the six-hospital system. "We didn't do anything differently, but instead of calling them financial counselors, we call them benefits advisors."

She said some patients were put off by the old title, and "benefits advisor" is a more accurate description of the position. "They're not counseling patients on how to handle their finances. They're educating them on what their employer purchased for them, or what they've purchased for themselves, and how it applies to this health service," said the chief nurse specialist.


Faced with a burgeoning population of patients covered by high-deductible health plans, hospitals need ways to improve front-end collections and effectively manage self-pay accounts. From offering flexible payment plans based on financial realities to holding open discussions with patients about their financial responsibility for healthcare costs, making the payment and billing process more patient friendly is a key imperative for most hospitals and health systems.

1 Evans, M. (2017, June 28). What We Can All Do About Rising Healthcare Costs. Retrieved from

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