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Using a Frontline Offense to Mitigate Your Financial Risk in Today's Sick Economy

By Bruce Nelson, Vice President, Sales and Marketing, SearchAmerica, A part of Experian

It is a usual day at a hospital. A new patient enters an Emergency Room needing care for a broken arm. The treatment process begins… the registrar admits the patient, a nurse preps the receiving room, an X-ray technician readies the equipment, and the financial director sighs as he sees the hospital’s finances plunge. Why? In today’s economy, every patient entering their facility is more and more likely to be discharged feeling better, but leave the hospital in a weaker financial state than when they entered. 

An ever growing number of today’s patients are responsible to pay for a portion of their care. Many need financial assistance, charity, or a payment plan, or they may simply default on their financial obligation.  The number of underinsured patients is rising rapidly to an estimated 25 million adults in the United States, an increase of 60 percent since 2003 according to a recent study by PriceWaterhouseCoopers. The result is a rise in self-pay patient population, who have become a significant piece of a hospital’s revenue cycle.  These individuals are often unable or unwilling to pay the high deductibles associated with their plans, leaving the hospital with increasing bad debt. Coupled with decreased financial giving and elective surgeries, the outlook is grim. 

However, even in the worst of times the hospital’s mission remains the same -- to care for those in need of medical treatment within their communities. Despite its financial woes, hospitals must remain viable to serve its mission.  

The economy of today has resulted in capital resources vaporizing and investment income turning negative. This means budgets are stretched and many hospitals are looking to their front-end staff and systems to buffer their organization from today’s financial crisis. The following are a few steps that financial executives can take to better financial health that apply to any economy, without significant cash outlay: 

Step One:  Diagnose or Prequalify the Patient
With today’s frequent changes in insurance coverage (due in part to rising unemployment) and medical  identity theft, hospitals need to be vigilant in attaining the most recent and accurate information on every patient.  

First, hospitals need to be sure the patient is who they claim to be, and the provided coverage (if any) is valid. Then, they must understand the patient’s ability to pay their bill. It may be a question not of if they can pay, but when or how they can pay. Knowing this information at registration establishes a mutually agreed upon relationship and can protect the hospital from undue risk.  

Non-emergent medical treatment now requires the hospital knowing its financial risk in serving this individual and then mitigating this risk as much as possible. 

Step Two: Deliver a Personalized Financial Treatment
The hospital’s frontend should have a suite of payment options available that protect the hospital from accumulating bad debt. These may include pre-payment at registration (cash, credit card, or a medical care credit card plan issued by a third party), hospital approved payment plans, charity programs, and government assistance programs, among others.  Especially for self-pay patients, appropriate options should be made available to ensure payment using one or multiple options. 

Teaming with medical staff, frontend personnel should be able to offer patients approximate costs of proposed treatments, especially those that can be delayed or are elective.  This information can change the necessary financial relationship and options available. It also empowers the patient to make educated choices on elective or optional components of their care. 

Step Three: Act Quickly
Aging of accounts will worsen in recessions. Collection policies and procedures should be directed at carefully segmented patient populations defined according to a patient’s ability to pay their bill and its balance. In addition to frontend collections, some suggestions have included offering incentives for pre-paying or early payment of medical bills to maximize cash balances in the short term. Often the first medical bill to reach a patient may be the first one paid, hospitals should see this as a race and beat other providers to the finish line. 

There is no magic to surviving in today’s economy, avoiding layoffs and the other cost cutting measures. However the hospitals frontline can minimize risk and improve cash balances if used properly. It is time to equip frontend staff with the technology and processes to identify patients quickly, assess their financial capabilities, and trigger a financial plan made to fit each unique patient.  

If a hospital falls into poor financial health, its mission cannot be fulfilled. It is important to the community it serves to be diligent in protecting its financial health.   

LATEST NEWS

SearchAmerica unveils next-generation service to help hospitals better control patient receivables and increase collections
June 14th, 2010

SearchAmerica Adds new service to help hospitals better manage financial health
May 13, 2010

SearchAmerica HFMA Sunspots Newsletter Article
February/ March 2010

SearchAmerica Releases Touchette Case Study
January 30, 2010

Search America Wins 2009 Tekne Award
October 29, 2009

SearchAmerica Unveils Five E-Learning Modules for Health Care
October 8, 2009

Universal Health Services (UHS) Implements Efficient and Financially Advantageous Process for Rising Self-pay Patient Population
August 20, 2009

SearchAmerica President, Daniel Johnson, Named Ernst & Young Entrepreneur Of The Year
June 30, 2009

SearchAmerica Releases Red Flags Rule Sell Sheet for Compliance and Legal
June 24, 2009

Experian Acquires SearchAmerica
December 2008

UPCOMING EVENTS

Innovations '10 for Healthcare IT Siemens Customer Education Symposium
Gaylord Palms Hotel and Conference Center
Orlando, FL
August 8 - 11, 2010

Maryland AAHAM Chapter
Clarion Hotel,
Ocean City, MD
September 14 - 16th, 2010

NAHAM-NE
Holiday Inn
Stamford, CT
October 18 - 19th, 2010

2010 HFMA Region 9 Conference
Sheraton New Orleans Hotel
New Orleans, LA
November 14 - 16, 2010

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July 29, 2010 1:00pm CST

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