Healthcare costs and fears of losing coverage became a top-of-mind issue for Americans in 2017 as Congress made several attempts to repeal the Patient Protection and Affordable Care Act (PPACA).
While that Congressional action provided one focal point, long-term trends in the healthcare industry were also signaling dramatic challenges for care providers. In particular, the continued offloading of medical expenses into patients’ wallets is prompting increased collection costs and bad debt risk by hospital systems, especially charitable care organizations, and the need for expanded collection methods from healthcare providers.
As challenging as the situation is, 2018 could be even worse, as double-digit increases in premiums are likely for several states next year. According to a recent MarketPlace article, Georgia premiums are set to rise a dramatic 57%1 . Here’s a look back at the biggest stories of 2017 and a look ahead to 2018:
1. Multiple attempts at repealing ACA. The House of Representatives narrowly passed a bill in May that sought to repeal core elements of the ACA, including the expansion of Medicaid, subsidies for insurance coverage and mandates for people to get coverage. In July, a different Senate version of a bill looking to repeal the ACA failed by one vote and in September, a repeal bill written by Senators Lindsey Graham of South Carolina and Bill Cassidy of Louisiana was scotched when it failed to get enough votes. Graham said he held out hope that the bill might get another vote after Congress tackles tax reform.
2. The patient becomes the new payer. This is a long-term trend that continues to gather momentum. A June 2016 study from TransUnion found that 51% of patients owed more than $1,000 in out-of-pocket costs and 77% owed more than $5002. Overall, according to the Henry J. Kaiser Family 2016 Employer Health Benefits survey, deductibles rose 63% since 20113. While the ACA puts limits on out-of-pocket deductible expenses—$6,600 for an individual and $13,200 for a family in 2015 before marketplace subsidies -- those costs are out of most American’s price range. Nationally, bad debt for hospitals hit $55.9 billion in 2017, or about 2% of overall revenues4. (Not for profit hospital margins are typically around 2-4%.5) By necessity, hospitals have become more adept at debt collection for this reason.
3. Analytics gain center stage. Data and artificial intelligence have provided innovative ways to protect revenue and limit exposure to bad debt. Data analytics can help hospitals become more efficient by providing insight to denials, capacity, revenue yield per patient and payer, and labor productivity. Data can also be used to identify patients who are likely to have trouble paying their bills and help caregivers take proactive measures to engage patients early to have positive financial outcomes.
4. Patients take control of their healthcare. Since patients are shouldering more of their healthcare costs than ever, they need to be prepared with the right information so that they can make informed decisions. They want to know what services cost and want a flexible payment will option to fund their care over time. Providers will need to engage patients early and meet them as consumers to optimize collections and charity efforts.
Looking ahead
With a tax reform bill on the Senate floor at the time of this writing, disruption to healthcare will certainly continue in 2018. Changes in taxes have mixed results to providers, as well as repealing elements of the ACA. One element is certain - the patient is the new payer in healthcare, and providers will have to meet them as consumers as the costs continue to shift. Legislative health care reform, denial prevention, patient payment programs, consolidation, and value-based care are all drivers that impact financial outcomes in healthcare. It will be imperative for providers to protect their revenue to ensure care can continue to be provided in the communities they serve.
1 Marketplace, “Health care premiums for 2018 set to go up by as much as 50 percent,” October 5, 2017 - https://www.marketplace.org/2017/10/05/health-care/uncertainty-healthcare-premiums-increase-2018-50-percent
2 TransUnion Study, “Patient Payment Responsibility up 13% in One Year,” June 28, 2016 - http://newsroom.transunion.com/patient-payment-responsibility-up-13-in-one-year/
3 Henry J. Kaiser Family, “ 2016 Employer Health Benefits survey” – September 14, 2016 - https://www.kff.org/health-costs/report/2016-employer-health-benefits-survey/
4 American Hospital Directory, Inc., “Bad Debt Expense Benchmarks,” – February 2017 - https://www.ahd.com/news/HFM_DataTrends_2017_February.pdf
5 CNBC, “Two in three patients can't pay off their hospital bills” – June 26, 2017 - https://www.cnbc.com/2017/06/26/two-in-three-patients-cant-pay-off-their-hospital-bills.html
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.