“If a $20 co-pay is not collected right away, the billing department may have to mail multiple invoices, coordinate with the insurance carrier and eventually involve a collection agency,” says Francis Hollweck, a senior manager in Crowe Horwath’s Healthcare Advisory Services group. “If hospitals put procedures in place to identify and secure patient liabilities upfront, they can reduce their bad debt, which for large hospitals can add up to millions of dollars.”
In order to reduce bad debt before it accumulates, Mr. Hollweck says hospitals should focus on monitoring and implementing the following operational control points:
1. Pre-service management. For scheduled procedures, hospitals should implement a process to validate all patient demographic data, including insurance information. Ideally, these out-of-pocket costs should be collected ahead of time, or at the minimum, on the day of the procedure.
2. Financial advocacy. Hospitals should have standard questions and electronic tools to quickly determine the most appropriate path for payments related to a patient’s clinical services. For patients who may be financially compromised, it is most comfortable for them to immediately understand the charity or payment reductions available to them. This provides a hospital with more focused discussions with those patients who have the ability (including insurance coverage) to pay for their care. Segmenting patients along these lines not only reduces the prospect of bad debt, but studies have shown that it also increases patient satisfaction.
3. Department accountability. In this economy, conversations that involve asking for co-pays can be tough, particularly if the treatment was unexpected or severe. Mr. Hollweck suggests that all departments with points of patient entry — emergency, surgical check-in, outpatient radiology, etc. — follow an approved, standardized process designed to identify and clarify patients’ financial liabilities. “Many organizations fear patients’ responses to this kind of interaction. Most patients I’ve talked to are glad to have these discussions prior to service, rather than be surprised with a large bill later,” he said.
4. Management reporting. Hospitals should monitor, track and manage uncompensated care performance metrics at all of their service sites. By tracking activity by patient type, service line and payor level, hospitals can better assess workflow productivity and determine which operational points to focus their efforts on moving forward.
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