A recent survey of more than 300 financial managers in healthcare found that 70 percent of respondents collected less than 30 percent of their payments at the point of service and almost half collected less than 15 percent of payments prior to service. The survey was designed by the credit bureau TransUnion and distributed to attendees of the Healthcare Financial Management Association’s (HFMA) annual conference in June.
Additionally, for those who collect payments on the back end, 80 percent of respondents said less than 60 percent of payments were made, while nearly 25 percent said recover rates were between 0 and 15 percent.
“Traditionally, hospitals have focused their financial attention on collecting payment after the patient care cycle has been completed, which can be incredibly time intensive and expensive,” said Milton Silva-Craig, executive vice president of TransUnion Healthcare, in a TransUnion report. “Our poll confirmed there is significant opportunity in point-of-service collections, given the drastic disparity between front-end collections and back-end recovery rates.”
Respondents also indicated that the biggest challenge in collecting at the point of service is determining what is owed (37 percent), followed by preparing and training staff and lack of real-time data. They indicated that the biggest challenge for patients when it comes to paying at the point of service was that they are unprepared to make payment (36 percent), uneducated about the option to pay at time of service, can’t afford to pay at time of services or unwilling to pay.
Overall, 30 percent of respondents said 3 to 5 percent of net revenue was lost to bad debt in 2010.
“Hospital staff should communicate the patient’s financial responsibility prior to service and registrars should be well trained and enabled to ask patients for payment in a way that doesn’t compromise the care experience,” Silva-Craig said. “To improve a revenue cycle’s collections rate and cash flow, automated tools and real time data at the point-of-service are also necessary. Intelligence in an instant is the idea of delivering the right data at the right time to the right party. In this case, patient responsibility estimates to patients and registrars prior to service can improve the overall collections experience for all parties.”