How Providers Fight Back Against Patient Bad Debt
By Greg Bengel, contributing writer
Inefficiencies in out-of-pocket payment collection processes cause leading providers to seek alternative methods
If you’re like the majority of healthcare providers, you probably find your out-of-pocket payment collections process to be both financially inefficient and administratively arduous, saddling you with bad debt and unnecessary paperwork.
It’s a situation you can ill afford. In 2010 alone, patient bad debt resulted in more than $65 billion in uncollected revenues, according to a McKinsey Quarterly report. In 2011, hospitals provided $41.1 billion in uncompensated care, which made up 5.9 percent of annual hospital expenses according to ACA International.
Clearly, this deficit places severe strain on healthcare providers. Worse still, the fastest-growing portion of that debt comes from insured patients. Many fail to pay the balance of their bill after their health plans have done their part. As such, the McKinsey Quarterly report predicts that the bad debt problem will get worse — not better —- when more than 30 million uninsured Americans gain health coverage.
And the problems don’t stop with the direct financial impact of uncollected bills. This report from The Physicians Foundation says that physicians spend more than 22 percent of their time on non-clinical paperwork.
These inefficiencies in out-of-pocket payment collection processes are causing many providers to look for alternative methods of getting paid. A recent announcement from PaySpan, Inc, a provider of healthcare payment and reimbursement automation, provides an example. The company announced the acquisition of the assets of mPay Gateway, a point-of-service patient payment solution for healthcare providers. PaySpan hopes that the acquisition will enable physicians, hospitals and other healthcare providers to manage payment collections more efficiently and reduce the clerical headache associated with patient financial responsibility. Rather than chasing down patient payments months after treatment, they hope that the new solution will allow providers to collect patients’ out-of-pocket costs at the time of service, and the remaining patient responsibility payments automatically after the payer claim payments are received.
Innovation may not be the only answer. Another solution may lie in utilizing current tools more efficiently. An article on insidepatientfinance.com breaks down some of the tools already in existence to help reduce bad debt. The article advocates using predictive analytics, charity score predictive modeling, and identity verification to reduce the amount of money lost due to inefficient payment processes.