One of the biggest – and most critical – challenges hospitals face is collecting from patients. According to the Chicago Tribune, oftentimes, hospitals only receive 20 percent of what a patient is personally responsible for within the first 120 days of billing him or her. Improving patient payments isn’t a new challenge for CFOs, but it’s coming to the forefront because of health care reform and employers looking to cut their health care costs. A significant number of exchange-offered health plans are high-deductible programs. A recent study by the Deloitte Center for Health Solutions found more than half of surveyed employers are choosing group plans with larger out-of-pocket costs to save money.
As more patients with high-cost responsibilities flood hospitals next year, CFOs will need to find a way to mitigate the risk of not receiving accurate patient payments. How can hospitals improve their patient collections to avoid mounting debts when patients have higher out-of-pocket costs?
Many hospitals have found the answer by collecting money upfront with point-of-service (POS) payments.
The collection practice everyone is talking about
POS collections are not a new concept. In fact, according to the Healthcare Financial Management Association, one Ohio hospital has asked patients to pay for part of their care upfront since 1992. According to HRMA, a Michigan health system requests money to be paid upfront during its patient registration process. In a way, the Michigan health system asks the patient to make a deposit. Even though hospitals have collected payments from patients right at the POS for years, the patient billing strategy has recently started to turn heads as a great solution to a traditionally difficult problem. Hospitals from Illinois and California have already enjoyed the fiscal advantages of adopting a POS collections strategy, with one Chicago health system telling the Chicago Tribune the patient payment method helps the hospital provide customers with price transparency to understand their financial responsibilities.
Yet some wonder if collecting patient payments right away actually benefit the health care community? Hospitals are still legally and ethically obligated to provide service to patients even if they aren’t able to pay, the Chicago Tribune article noted. Moral and legal commitments aren’t the only challenges to the transition to POS payments. Hospitals are also concerned that patients would walk away from care if they knew they had to pay for their care right away.
In fact, POS collections don’t just benefit hospitals, but patients as well. When patients know upfront what they will owe, they are better able to budget accordingly and begin paying off their bills immediately, bringing peace of mind to both the hospital and patient.
Still, hospitals that have already adopted the practice have found that communication is vital for POS collections to be successful; patients can have many reasons for not paying off their bills right away. In a 2010 presentation about POS collections by the HFMA Nebraska chapter, experts warned health care leaders that patients may say they don’t have the payment with them or they want their insurance to pay first. The chapter suggested a successful POS collections strategy relies on encouraging patients to pay, not forcing them to.
“[POS payments is] a dramatic change in collection practices,” Andy Scianimanico, vice president of revenue cycle for Northwestern Memorial Healthcare, told the Tribune. “The biggest challenge for us is to move conversations (with prospective patients) as far up in the process as possible. It’s not about strong-arming patients to pay. It’s about getting information into the hands of patients so they can make better-informed decisions.”
Hospital executives and industry leaders are talking about POS payments at conferences and online because they understand the collection method will be key in the era of consumer driven health care. Getting involved in the discussion can keep health care administrators competitive when more hospitals are struggling to make ends meet.