We all know the risks associated with self-pay patient accounts. The cost to collect is up to three times higher than on commercial insurance accounts, and the longer a self-pay balance goes unpaid, the lower the probability you will ever collect. The reality is, these problems are here to stay because of rising healthcare costs and more high-deductible, consumer-driven healthcare insurance plans. It’s now common for hospitals to see patients with annual deductibles anywhere from $2,000 to $10,0001—quite a burden for many people. You’ve probably heard the statistic that nearly half of Americans couldn’t come up with $400 to pay for an emergency expense without borrowing money or selling something.2 Unfortunately, some people wouldn’t be able to get the money at all.3

In January, the Kaiser Family Foundation released the results of a survey showing one in five working Americans with health insurance have trouble paying their medical bills. As you would expect, the number is even higher for the uninsured, with 53% facing medical bill problems.4

What the self-pay patient means to you financially

When patients can’t pay, your accounts receivables (AR) days go up, cash flow slows down, bad debt mounts and revenue shortfalls are almost inevitable.

The impact of self-pay is one more burden for hospitals already struggling to reduce costs and increase revenue. Stepping up efforts to collect past due medical debts on the backend is certainly necessary, and for hospitals with limited resources, there are excellent outside services that can augment the internal team. Overall, McKesson is seeing more and more hospitals and providers take a proactive approach to self-pay. Addressing it up front not only helps reduce AR days by collecting payment sooner rather than later, it also helps prevent bigger, more serious revenue cycle problems that could threaten the hospital’s long-term growth and success. One very important part of this proactive line of attack is patient-friendly billing practices.

Despite industry improvements made thanks to HFMA’s Patient Friendly Billing® project, “patient-friendly” hasn’t exactly been an accurate way to describe a typical hospital’s billing process. To stem medical debt losses, this must change. Keep in mind that patients taking on more financial responsibility for healthcare is new to many people. At the same time, we are all becoming more savvy healthcare consumers and expectations of service in the healthcare environment are changing. Whatever you can do to make the billing process easier and more understandable can help increase collections and improve patient satisfaction.

Steps to improve self-pay collections
  1. Engage patients early in the revenue cycle. Your patient access staff should clearly communicate to patients what their anticipated financial obligations will be and, if possible, collect 50% or more pre-service. Ideally, your staff can assess patients’ ability to pay and, where necessary, develop payment plans that allow them to pay their balances over time. Answering questions and counseling patients on their payment options are good ways to ease patients’ anxiety and increase their likelihood to pay.
  2. Provide easy access to payment processing at every point of service in your facility for patients’ convenience. Improving collections at the point of service includes providing scripts and coaching designed to help your team more easily ask for the payment up front.
  3. Many people are used to paying bills online, and medical bills should be no different. Give them online access to their accounts so they can see what their insurance has covered, verify recurring payments and make payments anytime and anywhere.
  4. Finally, close the loop by setting up an efficient process for follow-up phone calls and managing patient questions and complaints. Audit your own patient payment process by emailing or calling support lines regularly to help ensure they are functioning as planned and that staff is responsive.
A proactive formula: processes, technology and patient advocacy

Even though self-pay risks are clear, many hospitals either don’t know where to begin, or they lack the resources and time to implement a thorough solution themselves. At McKesson Business Performance Services, we’ve found the right combination of processes, technology and patient advocacy to help maximize collections and shorten collection cycles on patient balances. Our services include:

  • An analysis of your operational needs and creating a workflow customized to your hospital. We implement workflow technology to help your staff estimate patient costs, verify insurance eligibility and assess patients’ propensity to pay.
  • Dedicated staff to work with patients without increasing your overhead costs. Where it makes sense, we may recommend predictive dialers and automatic call tracking and recording (where available by state law) to follow up on self-pay obligations early and often, and help you field patient complaints.
  • Acting on your behalf and protecting your interests while treating your patients with dignity and respect.

There’s no question that self-pay will continue to be a key part of the revenue cycle for the foreseeable future. Partnering with experts like McKesson Business Performance Services allows you to take a proactive approach and improve self-pay collections and patient satisfaction without adding high overhead costs. Acting as your extended business office, we help you shorten AR days, increase cash flow, reduce medical debt and optimize financial performance.

McKesson Business Performance Services provides healthcare organizations as much – or as little – help as they need to optimize all areas of the revenue cycle, including patient access, coding, charge capture, compliance, medical billing and accounts receivable management. Learn more about our revenue cycle management services and how we can help you grow revenue and maintain positive cash flow.

2The Secret Shame of Middle-Class Americans,” by Neal Gabler, The Atlantic, May 2016
4New Kaiser/New York Times Survey Finds One in Five Working-Age Americans With Health Insurance Report Problems Paying Medical Bills,” January 5, 2016

Beth Prince

About the author

Beth Prince is the director of operations for hospital and health system revenue cycle services. Prince has over 20 years experience in all areas of the revenue cycle with expertise in process improvement and optimization.