How Patient Financial Hardship Impacts Your Practice

What you can do to keep your business and your customers’ goodwill intact

“If improving your patient payment collections isn’t a top priority in your financial plan this year, you’re in trouble,” relates the telemedicine company eVisit. “Why? With the rise in high-deductible [insurance] plans, patients are facing bigger medical bills—ones they aren’t always prepared to pay.”  

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How Patient Financial Hardship Impacts Your Practice

Apr 30, 2018

How Patient Financial Hardship Impacts Your Practice

What you can do to keep your business and your customers’ goodwill intact

“If improving your patient payment collections isn’t a top priority in your financial plan this year, you’re in trouble,” relates the telemedicine company eVisit. “Why? With the rise in high-deductible [insurance] plans, patients are facing bigger medical bills—ones they aren’t always prepared to pay.”

If your patients can’t pay their bills it can put the financial health of your practice in jeopardy.  Unfortunately, this is a problem that is likely to get worse before it gets better. According to a new survey of 1,000 Americans conducted by 20/20 Research, “61 percent of Americans have no money saved for their healthcare expenses, and 64 percent have avoided or delayed medical care in the last year due to unexpected costs.”

The survey also revealed that “69 percent of Americans reported that their deductible was at least ‘somewhat difficult’ to afford and 22 percent reported ‘very difficult’ or ‘impossible.’”

Not surprisingly, “the higher their deductible, the less likely patients are to pay what they owe,” reports NPR, which also quotes Richard Gundling, senior vice president at the Healthcare Financial Management Association, who says that “for providers, there’s more risk with these higher deductibles, because the chance of being able to collect it later diminishes.”

What can a medical practice to do when a patient can’t pay? One option is to turn patients away. Another option is to accept less for services, although this isn’t a desirable. Aside from the fact that healthcare is a business, there may be potential legal ramifications for waiving deductibles and copays. A third more desirable option would be to find creative ways to help patients get care and your practice gets paid.

Maximize payments

Change Healthcare has helpful advice for maximizing your chances of getting paid. Though much of Change Healthcare’s advice is geared toward hospitals, most of it applies to office visits as well. Among their recommendations:

  • Engage patients early on and clearly communicate what their financial obligations will be
  • Provide coaching designed to help your office staff effectively ask for payment up front
  • Enable patients to pay their bills online
  • For patient convenience, provide easy access to payment processing at every point of service

One last bit of advice, recommended by the Go Practice Blog, is to offer a payment plan with automatically recurring payments. That is, “set up a credit card on file and have the patient sign an agreement for a regular monthly charge.”

Create a plan

As you might expect, offering the ability to pay with a credit card—and allowing a patient to meet their financial obligations over an extended period of time—can be a big help to a patient or family that is struggling financially.

While a payment plan is probably best arranged at the time of (initial) service, a plan can also be established for accounts in arrears. In fact, a patient is more likely to pay their debt if they can make manageable automatic payments, as opposed to trying to save enough to pay a large lump sum. 

Better yet, evidence exists that patient-friendly payment plans are “associated with reductions in negative access-to-care and social outcomes typically associated with medical debt and with negative long-term health effects.” That’s according to a study that appeared in the Fall 2017 issue of the Journal of Health Care Finance, which concluded that patient-friendly payment plans, “in combination with other public health policy and practice solutions, have the potential to help patients successfully manage their medical debt, and in turn improve key determinants that influence their health.”

This can also allow your practice to avoid an increase in “days in accounts receivable,” (the average number of days to collect payments due), as well as the public relations challenges of sending a patient account to collections, which can result in the loss of patient goodwill, which can ultimately, hurt your bottom line.

When it comes to the financial health of your practice, offering solutions to patients in financial difficulty may actually help your revenue stream in the long run.

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