Patients are responsible for a greater portion of their healthcare bills than they were two decades ago, and many can’t afford their out-of-pocket costs or high deductibles, leaving providers in the lurch.
“Over $485 billion in patient responsibility is billed every year by medical providers across the country, and according to industry stats, only about 45 percent of that is collected,” said Tyler Crawford, CEO of BHG Patient Lending and chief business development officer at Bankers Healthcare Group, BHG Patient Lending’s parent company, citing a report by the Kaiser Family Foundation.
With 55 percent of medical expenses going uncollected, it’s evident that healthcare wasn’t ready for the significant increase in uninsured patients and high-deductible plans that’s occurred over the past decade, Mr. Crawford said during an interview with Becker’s ASC Review.
Rise of already unaffordable patient expenses
From 2006 to 2015, the amount consumers with employer-sponsored health insurance had to pay for healthcare before their insurance kicked in increased by 255 percent, according to a Kaiser Family Foundation employee health benefits survey, which entailed interviews with nearly 2,000 employers in early 2015.
That jump was followed by a 29.4 percent average increase in patients’ deductible and out-of-pocket maximum costs from 2015 to 2017, according to a Black Book survey of 2,698 providers and 850 healthcare consumers. Patients’ financial responsibility — and the popularity of self-pay plans — will only continue to rise, Mr. Crawford predicted. That’s concerning given the results of a survey released by the Federal Reserve in 2018, which suggest 40 percent of Americans would struggle to pay a $400 emergency bill.
“There are a number of patients who are being billed upwards of $1,000 to $2,000 by surgery centers,” Mr. Crawford said. “Therefore, they need payment options.”
Downfalls of current patient financing models
Despite the major portion of bills going uncollected, as many as 36 percent of providers never discuss financial obligations with patients prior to delivering care, according to West Corp.’s 2017 survey of over 230 providers. Some ASCs are still going about collections as they always have. This “old-school” approach, as Mr. Crawford called it, involves minimal help for the healthcare consumer. An ASC will accept patients, determine their insurance coverage and try to collect via manual processes before tapping a collections agency. This hands-off approach overlooks the need for billing transparency. Seventy percent of consumers reported being confused by medical bills and 87 percent of consumers want to know their financial responsibility early on, according to a 2018 report from InstaMed.
“The patient isn’t being educated upfront on their payment options and bills go unpaid. As a result, providers are relying on sending a paper statement, a reminder, or a collection call for people to start paying,” Mr. Crawford said. “I think that’s the way of the past. And it’s why we’re in
the current situation with uncollected balances.”
Mr. Crawford’s sentiment is supported by industry research. For example, Black Book’s 2017 Revenue Cycle Management report found providers’ “profit margins continue to be impacted negatively by traditional collection solutions,” which leave them with millions of dollars in unpaid medical bills.
Another way ASCs fall short when it comes to collections is relying too heavily on in-house payment plans, according to Mr. Crawford. While a step in the right direction, in- house plans are not always the best options for ASCs, he said. In-house payment plans consume significant administrative resources, relying on staff to manage the plans and follow up with patients. The success of an in-house financing solution also hinges on having the right technology to help patients pay in increments.
But even with effective tools in place, centers build up their accounts receivable while waiting for funds to come in.
One of InstaMed’s survey findings underscored the issue: 77 percent of providers said it takes more than a month to collect any payment.
“In-house payment plans can restrict the cash flow of a center and hurt them from a financial standpoint,” Mr. Crawford said.
Some facilities avoid the problems associated with in-house payment plans or traditional collections processes by offering card-based financing options. While these services entice patients with an introductory promotion period, they often then jump to “astronomical” interest rates as high as the mid-20s, Mr. Crawford said. If a patient is confused and doesn’t pay off a balance inside the promotion period — or has one late payment — they’re less likely to be satisfied with the care experience.
Providers should note the financial advantage to offering a patient-friendly collections solution, a 2016 Deloitte report suggested. Hospitals that had “excellent” patient-reported experience scores between 2008 and 2014 had an average net margin of 4.7 percent, compared to an average net margin of 1.8 percent among hospitals with “low” ratings.
Effective ways to boost collections and satisfaction
Along with hurting revenue-boosting patient satisfaction, inefficient or nonexistent patient financing solutions contribute to higher same-day cancellations. In 2018, about 40 percent of over 1,300 adults surveyed by NORC at the University of Chicago and the West Health Institute said they’d skipped a medical test, treatment, or follow-up appointment in the past 12 months because of insufficient financing or inability to pay.
Educating ASC patients upfront about what their expenses are — and how to manage them — is key to preventing this problem, according to Mr. Crawford.
“With a program like BHG Patient Lending, you can reduce cancellations,” he said. “Because patients will know before they have their procedure that they qualify for a financing plan, they can budget for it and move forward.”
The program also ensures patients receive more manageable bills post-surgery, meaning they’ll be more likely to pay, which will help boost centers’ collections, Mr. Crawford said. Patients capable of managing their bills are also more likely to be satisfied with the entire care experience and may discuss that experience with others, helping ASCs stand out among competitors.
“BHG Patient Lending is a great option for consumers and is easy to understand. We focused on making patients’ healthcare more affordable and tried not to overcomplicate the payment options. In doing this, we have created a win- win for both the patients and providers.” Mr. Crawford said.
BHG Patient Lending offers consumer loans through its community bank partners and works closely with other companies within the healthcare industry, including a tool that estimates patients’ out of pocket costs and the amount insurance will pay prior to the procedure. This information empowers ASCs to have upfront conversations about costs, giving patients the opportunity to budget for expenses, according to Mr. Crawford. If the lump sum isn’t affordable, they can apply for a BHG Patient Lending’s financing solution to spread out payments over time. Applying for the financing solution can be done inside the ASC via mobile phone, or from a home desktop computer. BHG Patient Lending approves any credit score to help as many patients as possible.
When an approval is issued, BHG Patient Lending allows the patient to pick a monthly payment that works for them. They see a grid of options with a minimum payment of $40 a month and a maximum loan term of five years.
“The customer that wants to pay $500 a month and shorten the term of their loan and pay it off a little bit sooner can,” Mr. Crawford said. “But someone who might be a little bit more restricted in their monthly cash flow can pick a longer term with a reduced payment of only pay $100 a month — as
long as it fits within that 60 months.”
Another draw of BHG Patient Lending is that it pays facilities 100 percent within 72 hours of the patient’s loan approval, Mr. Crawford said, which “puts them in a much better situation than if they were trying to collect themselves or trying to do that through in-house payment plans.”
Trends requiring ASCs to adapt
Today’s healthcare consumers want to be able to pay for their care over time through plans that suit their personal finances, according to Mr. Crawford. People want to be able to afford healthcare without having to pull from college funds or grocery budgets.
Giving them that option through programs like BHG Patient Lending significantly increases patients’ propensity to pay, he said, which benefits providers at the end of the day. The average annual deductible for single coverage in 2017 was more than $1,200, up from about $303 in 2006, according to Kaiser Family Foundation’s 2017 report. Over the next five to 10 years, Mr. Crawford believes, even more healthcare costs will fall on patients instead of insurers. He predicts consumers may become responsible for as much as 50 percent of their healthcare bills, on average, and providers will have to differentiate themselves by improving the payment experience.
In the future, Mr. Crawford said, healthcare may become a monthly cost that patients address the same way consumers pay bills for cars, mattresses and flat-screen TVs. Providers will have to adapt to changing payment trends to ensure financial sustainability as patients’ responsibility for healthcare payments increases and reimbursements decline.
“We want to partner with ASCs to make sure that they’re not suffering a financial loss because of this shift,” Mr. Crawford said. As they find themselves more frequently collecting higher amounts from patients, it’s essential for providers to overhaul their collections processes. Patient pocketbooks and provider bottom lines need a payment solution attuned to current industry trends.