Patients have experienced a 63 percent increase in deductibles from 2011, with the average deductible pushing $2,100 in 2016 according to a Kaiser Family Foundation report.1
To put that into perspective, it means patients are shouldering 30-35 percent of their healthcare bills in the form of co-payments and deductibles.2 Patients are responsible for even more than they were in the past, and needless to say, many patients are struggling to budget to pay for their healthcare. Patients rarely plan for the unexpected, especially if it’s beyond their financial means.
Despite the shift in the healthcare landscape, patients still experience payment shock when they realize how much they are expected to contribute to their medical expenses. In fact, a 2016 survey by The New York Times and the Kaiser Family Foundation found 20 percent of working age Americans reported problems paying their medical bills in the previous year.3 So what does that mean for hospitals? As more of the cost of care has shifted to patients, hospitals need to effectively differentiate a patient’s ability or willingness to pay a healthcare bill. When patients refuse or cannot pay, this has a trickle-down effect on hospitals in the form of bad debt. If a patient simply cannot afford to pay the bill, the bill should go to charity or financial assistance – both are considered lost revenue, and represent a large risk to most hospitals.
That said, hospitals and other healthcare providers should consider incorporating payment discussions into their communications and becoming financial advocates for patients. Financial transactions should be aligned with the clinical plan, which means hospitals should proactively incorporate financial communication into the overall health care delivery. Here are four tips to help hospitals and staff effectively become patient advocates.
1. Train staff: Taking a proactive approach to the revenue cycle requires rethinking staff roles and responsibilities. Staff should consider financial matters as an essential part of the overall clinical care delivery process. Hospitals can do this by updating policies, procedures, job descriptions and training protocols, to ensure their staff is informed when discussing financial matters with patients. Clinicians’ role as patient advocates is critical because their orders drive most services and procedures. They are well positioned to discuss healthcare with patients from a holistic perspective, clinically and financially. Revenue cycle employees should be trained to be empathetic to patients’ financial needs and to discuss financial matters with patients in a respectful, collaborative way. For example, hospitals can arm employees with scripts, talking points, FAQs and role-play practice sessions to help provide guidance for employees about how to effectively address various patient interactions. Organizations can also tactfully use employee incentives to help motivate the best outcomes from patient interactions.
2. Educate patients: Educating patients about their costs is about more than the hospitals’ need to reduce bad debt, more importantly, it highlights that patients should understand their payments (or lack thereof) can influence whether or not a hospital can continue to provide high quality care to the underserved. Healthcare coverage can be confusing, and the shifting costs can be difficult for patient to understand. Many patients are uninformed about their impending costs or financing options prior to a hospital visit, and hospitals are in a position to fill this educational gap. For example, implementing a marketing and communications plan with easy to understand literature and brochures can help patients understand the importance of managing their healthcare expenses. Specifically, patient communication materials and correspondences should be clear and concise to address how healthcare expenses can have detrimental impacts to a patients’ financial wellbeing if a funding plan is not in place at the time of or before services are provided.
3. Simplify financial conversations: Up-to-date information is important to enabling revenue cycle staff to take a more confident, competent, and collaborative and compassionate approach to patient financial discussions. Healthcare charges, coverage, and payments are highly complex, and standardization is difficult to achieve when implementing patient financial engagement strategies. However, providers can control the type of and method in which information is communicated, which can foster effective financial conversations with patients. Providing pre-service estimates can help patients understand financial obligations and foster financial engagement. Furthermore, it’s important to provide multiple channels for patients to get information about financial matters in the format they’d like to receive the information because this will help increase patient engagement with the materials. For instance, some patients may prefer receiving electronic communication and others may like to call on the telephone or receive a text. Flexibility, accuracy and consistency across channels is vital and can also make it much easier for patients to get all the information they need.
4. Adopt data-driven workflows: Since the cost of care can be confusing, clear, concise and accurate data is essential to establishing credibility between staff and patients. Specifically, providers should to verify patients’ identities and pre-service cost estimates and incorporate this information into applicable patient-access workflows to improve revenue cycle. Any process in place for financial navigations workflows should work to the advantage of both providers and patients by offering patients flexible payment options, considering patients’ ability to pay and the organizational risk of the bad debt. With these ideas in mind, revenue recovery workflows should also be improved continuously to meet the needs of all parties as health care and financial capabilities change. For example, workflow maps should take into account the patients’ journey, starting with the initial visit through the clinical event, and the billing cycle. Hospitals should then use workflow analyses to enhance the current method or consider experimenting with different approaches. Clearly delineated workflows help to ensure a consistent patient experience.
Above all, healthcare providers need to recognize that successful financial management hinges on effective communication with patients. This can take many forms, but hospitals and healthcare systems that try to avoid communication with patients regarding the cost of care assume a large amount of bad debt risk. With the various changes in healthcare, and the patients growing role as the new payer, hospitals will be tasked with shifting gears to become advocates for patients’ financial health as well as their physical health.
Jonathan F. Wiik, MSHA, MBA is principal for Revenue Cycle Management for TransUnion Healthcare. With more than 20 years of experience in health care, Wiik has worked in both the acute care and insurance setting, and he has developed several nationally-recognized programs in Point-of-Service (POS) Collections, financial clearance, and sharing best practices in hospital operations.
1 Kaiser Family Foundation report: http://www.kff.org/health-costs/press-release/average-annual-workplace-family-health-premiums-rise-modest-3-to-18142-in-2016-more-workers-enroll-in-high-deductible-plans-with-savings-option-over-past-two-years/
2 MGMA: Instamed Payment Trend report
3 Kaiser Family Foundation, New Kaiser/New York Times Survey Finds One in Five Working-Age Americans With Health Insurance Report Problems Paying Medical Bills, June 5, 2016, http://www.kff.org/health-costs/press-release/new-kaisernew-york-times-survey-finds-one-in-five-working-age-americans-with-health-insurance-report-problems-paying-medical-bills/
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