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By Monique Lappas
The ultimate goal of a hospital or healthcare organization is to provide exceptional patient care; however, making a profit is necessary to achieve that goal.
According to a survey from Sage Growth Partners, a healthcare research firm, more than a third of hospitals rack up at least $10 million in bad debt each year, and half do not expect to recover more than 10% of it from payors or patient out-of-pocket expenses.
Understanding Out-of-Pocket Expenses can be Complicated
Healthcare providers are more challenged than ever when providing quality care to an increasing number of patients facing unaffordable out-of-pocket costs due to high deductibles, being under-insured, or uninsured. With each of these financial hurdles, hospitals and medical practices face a tough decision:
1. Send the patient a constant stream of letters and notices informing them of their outstanding balance due.
2. Write-off the payment as bad debt and carry it on their balance sheet with the expectation that payment is unlikely.
Most patients’ bad debt accumulates because a patient cannot afford the balance after their insurance has covered its portion of the expense. Most medical insurance plans only cover part of the fee due to the provider, leaving the patient with out-of-pocket costs. These out-of-pocket costs include deductibles, coinsurance, and copayments.
Patients are often unaware of their out-of-pocket expense before their treatment, and in many cases, even if they are aware, they are unable to afford them. While it is ideal for a provider to collect all out-of-pocket expenses upfront, this is not always possible, especially for costly services like chemotherapy, GI infusions, and other expensive in-office injectables. The insurance carrier processes the medical claim first to calculate the patient’s responsibility and then reports it back to the provider on the explanation of benefits (EOB). It is then up to the provider to collect these payments by billing the patient.
Most organizations offer various options to make the payment process easier via patient portals and electronic payment options. However, these options are beneficial only if the patient can afford to pay. If the patient cannot afford their bill, they may qualify for a payment plan or financial assistance. Unfortunately, this extra step is not always enough, and the debt starts to mount.
Improving Cash Flow Management
Cash flow management is essential to all healthcare organizations’ viability, and their accounts receivable days are under constant measurement. Nearly all healthcare organizations bill insurance regularly to ensure ample cash flow and proactively send out a series of notices to patients to settle outstanding accounts. In these notices, the patient is instructed to submit payment within a given timeframe. If payment is not received, the provider will send the patient to collections (likely lowering patient satisfaction scores). However, sending a patient to collections does not guarantee payment and usually just reduces the provider’s reimbursement because the collection agency imposes a fee for their services.
Using a billing and collection process as the only means to collect monies owed is inefficient and usually unsuccessful, particularly when patients cannot afford their bills. While it is essential to maximize collections, organizations must be careful not to take collection practices to an extreme. They risk alienating patients, receiving more patient complaints, and ultimately reducing collections.
There is a Better Way
There are many ways to avoid the ‘bad debt’ cycle that your practice might find itself in, particularly when helping patients cover their infusion and in-office drug costs. By taking advantage of many of the manufacturers, foundation, and non-profit support programs, it is likely that your patients will be able to find the help they need to cover their out-of-pocket costs.
Patient Financial Advocacy
Q Consulting Support Services (QCSS) offers financial advocacy to patients through many financial assistance programs. They work closely with your clinical team to identify patients who are uninsured, underinsured, have high-out-of-pockets expenses, or high balances that qualify for assistance for their prescription drugs or infusion drugs. Below is a list of the most frequently used financial assistance routes; however, they are not limited to these options. QCSS has a comprehensive database of financial assistance programs to ensure the exhaustion of all avenues for patients and clients.
Financial Advocacy Options
Manufacturer Copay Card Assistance:
Drug Manufacturers offer Copay Card assistance programs. The programs’ purpose is to help people with commercial or private insurance cover their deductibles, copays, and coinsurance directly related to their prescription drugs’ cost.
Patient Assistance Programs:
These programs, frequently called PAPs, are designed to help those in need obtain their medications at no cost or very low cost. Many, but not all, pharmaceutical companies have PAPs.
Foundation Assistance – Copay and Premium:
Foundations offer financial assistance to those suffering from Chronic or Life-Altering Diseases when insurance is not enough to cover the treatment. Foundations help fill the gaps by assisting patients with their out-of-pocket expenses or covering costly insurance premiums.
Trust in the benefits of outsourcing financial services and seeking consulting in order to help your organization recover patient balances through financial advocacy programs that ultimately reduce bad debt, increase profits, and boost available cash flow. Take the burden off your team so they can focus on what they do best – provide exceptional care to your patients.
Monique Lappas, founder and CEO of Q Consulting Services, provides consulting and support services that saves hospitals and healthcare providers time, money and lives. She has worked with over 400 hospitals, across the United States and Canada, with clients ranging from critical-access hospitals to the country’s largest healthcare systems.
Monique has had to tap into much of her knowledge base, both in healthcare, finance and business management, to make the business a success. Her background in healthcare has spanned over 20 years. It began as a Quantitative Analyst for an investment bank in Sydney, then as an analyst covering the Emerging Markets at Wellington Management in Boston, MA and continued through to Wasatch Advisors in Salt Lake City, UT. In these roles, she analyzed healthcare service providers, pharmaceutical companies and hospitals from an investment perspective. She also spent time working within the investment banking healthcare team at Goldman Sachs and within the M&A division of a large Australian industrial company.
Monique hails from Sydney, Australia. She holds a B.Comm from Bond University (Australia), an MBA from the Tuck School of Business at Dartmouth and has also earned the Chartered Financial Analyst (CFA) designation.