Most hospitals carry a heavy load of bad debt, resulting in a long hospital revenue cycle, which ultimately has a negative impact on the financial health of the institution.
Revenue cycles will continue to get even longer as more patients are unable to afford to pay off their medical debt.
Employers are now passing on increased insurance costs to their employees through higher copays and deductibles. In fact, it's estimated that in 2015, one third of all large employers will offer only high deductible insurance plans. With employees facing this increase in deductibles, they are more likely to add to the bad debt burden of a hospital.
When hospitals shorten their revenue cycles by reducing bad debt and denials, they can achieve a 2% to 4% increase in net patient revenue. This may seem like a nominal number but it can amount to a significant increase in overall revenue for the healthcare provider. The key is for hospitals to be proactive by giving patients payment options to help ease their financial debts.
A balancing act: the financial needs of hospitals and patients
How do you balance the treatment needs of the patient with their ability to pay? Many facilities struggle to balance their need to collect payment with the desire to provide patients the time they may need to settle their bills.
Some providers achieve this balance by offering medical payment plans to their patients. These are programs that can shift the burden of debt collection from the hospital to a third party financing provider. This option gives hospitals immediate reimbursement for service rendered while allowing patients to set up a payment plan that will fit their budget. Medical payment plans also reduce hospital aging accounts receivables, which improve cash flow for the facility.
Opening the doorway to increased patient satisfaction
As a hospital, patient care and satisfaction are paramount concerns, but even the best clinical outcome can result in low patient satisfaction if debt collection is poorly handled. Unlocking the door to increased patient satisfaction can be as simple as offering options up front for how they can make payments later.
Most patient satisfaction surveys are completed weeks or months after a hospital discharge. When responding to the survey, patients consider the care and treatment they received but also everything that came afterwards. How the hospital addressed the collection of the deductible and copay can affect the patient's overall satisfaction with their experience.
Often the best way to improve patient satisfaction is to remove the hospital from the payment collection process. The use of third party financing will provide patients with low cost options to pay for their care without harassing collection calls and risk to their credit. When they consider their satisfaction, patients will focus on what is most important, the care they received.
Unlocking potential revenue for healthcare providers
In an attempt to manage aging accounts receivables, many hospitals assign patient bad debt to collection agencies, which cost money and can actually increase their financial losses. Alternatively, offering medical payment plans eliminates both the need for a collection agency and the additional loss of revenue.
Medical payment plans, such as those offered by Budco Financial, allow hospitals to be sensitive to the payment challenges of their patients while still enabling them to receive payment immediately.
Medical payment plans increase patient satisfaction, shorten hospital revenue cycles and provide facilities with the ability to balance patient needs with financial stability. They offer the perfect solution to the patient medical debt challenges faced by hospitals today.
For over 15 years, Budco Financial has been helping corporations and healthcare providers who have large amounts of small transactions to create consistent revenue streams by delivering no-interest or low-interest payment plan solutions. At Budco Financial, Terry demonstrates proficiency in achieving sustained revenue and income growth for customers, builds executive customer relationships, integrates multi-organization executives into leadership oriented teams, driving new business and enhancing operational efficiency for customers.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.