How to make the hospital revenue cycle more like that of Starbucks and the Ritz

Patients are increasingly becoming more involved in their medical care for a number of reasons, including the growing popularity of high-deductible health plans and the availability of price and quality data. Patients have more opportunities to be informed than ever before, and as they take on additional responsibility for their healthcare costs, their expectations are changing.

Patients are expecting their healthcare experience to be similar to interactions they have in other industries. They expect hospitals to provide Starbucks-like convenience with the personalized service of the Ritz-Carlton. Hospitals are responding to these demands as patients choose providers that meet their needs as well as their preferences.

"In the past, [healthcare] has been an industry run by doctors. Now, it's really shifting and physicians may lead patients to a location, but the customers have more of a choice," says Lilyan Fleming, senior vice president of revenue cycle service center operations at Parallon, a subsidiary of Nashville, Tenn.-based HCA that offers revenue cycle management insight and customized solutions.

Patients are consumers and now that they are taking on more financial responsibility for the care they receive, they expect high-quality care and to be treated more like a true customer.

The effects of consumerism have touched almost every facet of healthcare, including the revenue cycle. In fact, consumerism is one of the biggest trends affecting the healthcare provider revenue cycle, according to an Availity report released in March. Hospitals and other healthcare providers must change their billing practices to meet patients' raised expectations — or face losing their patients to a provider that does.

Offer patients the information they want early on

Rick Baker, regional CEO of revenue cycle services at Parallon, says transparency is crucial in this new healthcare environment where patients are key decision-makers. "We want to make sure we give patients clarity as soon as possible about what they owe," he says.

After a patient is scheduled, Parallon reviews the patient's insurance benefits and then lets them know how much they will owe. "The key is limiting surprises," says Mr. Baker. A 2014 TransUnion study shows there is a lot of work to be done in cutting down on medical bill surprises. The study found 62 percent of patients were either sometimes or always surprised by their out-of-pocket medical costs.

Although most patients want to be told how much their medical care costs are, the majority of patients are not being provided that service. According to the TransUnion study, 80 percent of respondents said receiving pre-treatment cost estimates and pre-treatment coverage estimates would be helpful in managing medical costs. However, only about 25 percent of the respondents had received treatment cost estimates from providers.

Provide upfront payment options

Patients are shouldering more financial responsibility when it comes to their healthcare. Five to 10 years ago, $500 to $1,000 would have been considered a high deductible, whereas about 81 percent of enrollees in these types of plans had deductibles of more than $2,500 in 2014, according to a report from The Advisory Board Company.

High-deductible health plans are a concern for consumers, but they can also be a problem for providers. Although patients are enrolling in plans that require them to pay more for their care, it is ultimately up to providers to collect that payment.

To address that issue, Parallon has created a streamlined financial process that gives patients the opportunity to pay upfront during pre-registration. "That way when they come to the hospital they aren't worried about the financial process and only about their care," says Mr. Baker.

Providing upfront payment options not only benefits the patient, but it also benefits the hospital because providers are significantly less likely to collect from patients after care has been given and the patient returns home. Although an average of 90 percent of physician practices and healthcare facilities agree that collecting patient financial responsibilities before the patient leaves the office is important to the financial health of their businesses, only 35 percent of hospitals report having processes in place to collect from the patient at the point of service, according to the Availity survey.  

When it comes to medical bills clarity and access are key

Hospitals also must work to meet the expectations of patients who either were not given the option to pay upfront or chose not to. These patients want a medical bill that is accurate and easy to understand, and they want to be presented with multiple payment options.

There is room for a great deal of improvement regarding the clarity of hospital bills, as a TransUnion survey found 54 percent of insured consumers are either sometimes or always confused by them.

Mr. Baker recently met with three patient focus workgroups in Houston to discuss what patients wanted in a hospital billing statement, and the group made it clear. "They don't want frills, they just want a simple statement and to know what they owe," says Mr. Baker.

Patients also want their medical bills to contain correct amounts, as medical bill errors are a widespread problem. Pat Palmer, founder of Medical Recovery Services, a national organization that helps patients identify and correct errors in their medical bills, told personal finance website NerdWallet that eight out of 10 hospital bills the organization receives contain numerous overcharges.

Once patients receive their medical bills, they want a seamless payment process in place. Patient portals are increasingly used by hospitals to allow patients to view and pay their bill online, which is something patients want, according to a 2014 Intuit study. The vast majority (77 percent) of patients would pay medical bills online if the option was made available to them, according to the study.

However, communication is vital to ensuring patients know they have the option of making a payment via a patient portal. Thirty-five percent of 2,017 adults surveyed for Xerox's annual EHR survey last year didn't even know patient portals existed.

Hospitals that fail to respond

Hospitals that fail to alter their revenue cycle to respond to patients' expectations will likely see bad debt rise, as they will fail to collect from patients who are either frustrated or confused by the old way of billing. Hospitals that fail to respond may also see some of their patients seek care elsewhere. That is something Mr. Baker fully understands. "If we don't take care of them, they'll find another place to go," he says.


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