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Patient Payment: How it Slows Down and How to Collect Faster

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Collecting patient payment isn’t as simple as it sounds.

According to HealthLeaders, 77% of healthcare providers say that collecting any form of payment from patients takes more than 30 days. Even worse, the same report states that 56% of consumers would not be able to pay a health bill of more than $1,000.

But how often do medical invoices actually cost that much?

A $1,000 invoice is only one-tenth of the average cost of a hospital stay in the United States.

After reading those statistics, it’s safe to say that receiving payment from the average person seeking services from their doctor is low.

If you’re a healthcare provider, I imagine these three thoughts are crossing your mind right now…

  1. How can I decrease the amount of time it takes a patient to pay their bill?

  2. Is there any way I can decrease the up-front costs of the services I provide?

  3. How am I expected to grow my practice without getting paid?

Don’t overwhelm yourself.

Below we’ve listed the biggest reasons why patient payment slows down a solution for each.

Problem: Surprise Medical Bills

There are many different scenarios in healthcare that lead to surprise medical bills. But, for now, let’s focus on one specific case.

Let’s say for whatever reason you need emergency or urgent medical care. You work with your insurance and choose a hospital nearby that they'll cover.

It’s safe to assume that all the staff at that hospital are “in-network” as well, right?

Not exactly.

While you’re there receiving treatment the staff determines that you need to anesthesia. For this to happen they need to contact an anesthesiologist. They radio for one, he comes in and the next thing you know the operation is complete.

You go home, take a couple of days off of work and pay your hospital bill a week later.

A couple of days later and you receive another medical bill. This one is from the anesthesiologist.

As it turns out, the anesthesiologist is operating at your in-network hospital as an out-of-network provider.

Before receiving your treatment, did you remember to check or ask for an in-network anesthesiologist? Of course not, you’re more concern about getting better.

Nonetheless, he administered anesthesia on you and now you have to pay a second medical bill.

Often, the out-of-network provider’s bill will cost the difference between your insurer’s payment and the total charge. This is also known as balance billing.

What’s the first thing you’d do if you received a surprise bill? It’d probably look something like this...

  • Call the hospital’s customer service department

  • Argue with them to lower the bill

  • Threaten to change services to one of their competitors

  • Seek out a “better” service.

If more than half of all patients can’t pay a medical bill of more than $1,000, the chances that they’d be able to pay two bills for the same visit is even lower.

Surprise billing brings the entire payment process to a hault.

Solution: Be Transparent with Pricing and Services

Think of Yoda’s famous quote, “Fear leads to anger. Anger leads to hate. Hate leads to suffering." If Yoda was a healthcare Jedi, his new quote would be…

Surprise or balance billing is so frustrating that they’re more likely to seek medical services from a different provider than pay.

One of the biggest trends in the revenue cycle side of healthcare is offering cost estimates and price transparency. This is largely a trend because it helps doctors prevent claim denials, but it also enhances your experience.

A second solution to be proactive. Instead of making them come to you with a surprise medical billing dispute, help them along the way. The best way to avoid surprise medical billing is to catch it before it happens.

For preventive-care visits, call each insurer to find out what's covered. After researching, let your clients know what is and isn’t covered by their plan.

This will not only enhance your experience but also increase your collection.

Problem: Patient Confusion

If you send a bill and the person receiving it is they’re confused, collecting from them will be harder.

There are four main situations that confuse people when receiving a bill. They…

  • Don’t know why they are being billed

  • Don’t understand how to pay the bill

  • Don’t know who it’s from

  • Don’t trust sending payment

Each situation listed above builds after one another.

For example, if a patient doesn’t know why they have a bill or who it’s from they won’t trust sending payment to the address or account listed.

Confused patients take similar actions listed within the surprise medical bills section. Thus, making it harder for you to receive revenue.

Solution: Design Statements That Reflect Your Brand

Whenever sending out statements, you should always keep the layout and design in mind. You’re sending something that represents your organization.

Not only that, but the main goal of a statement in the first place is to ask for money.

All outbound material must be professionally designed so that…

  • It’s easy to understand

  • They know who sent it to them

  • They can identify the best way to pay

In the picture above you can see a poorly designed statement versus a professional one.

In the left example, you can see it’s hard to identify who it’s from, what they are charging you, what forms of payment they accept, and how to actually pay them. Overall, it looks unprofessional and faulty.

On the right, the information's placed into understandable segments. It also looks cleaner, and more professional. The company sending the statement on the right can be proud of what they are sending.

Problem: People are Forgetful

The average mind thinks almost 80,000 thoughts each day. That’s an incredible amount of information continuously streaming through your brain.

With that many thoughts, it’s no wonder you’ll sometimes forget to do your chores.

My point is that we all have busy lives.

Setting a payment due date is one thing, but remembering it is an entirely new challenge.

Solution: Reminder Services

People are busy. Even when they aren’t busy they’ll likely say that they are because it’s become a status symbol.

To manage their time accordingly, many swear by their favorite productivity or scheduling apps to remind them about their day.

Instead of relying on your patients to remember when their medical bills are due remind them yourself.

Post appointment you send a statement. Why not pair that initial statement with an email notification reminder? If the account ages past 30 days, send the statement again and include a letter that emphasizes the overdue balance. If it continues to age, send a final notice statement, include a letter, and call the account holder.

Reminder services in healthcare can help you speed up your entire revenue cycle.

Problem: Patient Address Errors

About 35,500,000 people in the United States move every year.

Although there are official ways to let you know that they’ve moved, not everyone utilizes them. If someone moves before receiving their bill, it’ll be harder to collect from them.

Sending a bill through the mail that’s addressed to someone who no longer lives there will come back to you.

If this happens, it’s your responsibility to find the correct mailing address, resend the bill and collect payment.

But, every time you mail a bill to the wrong address there are two costs associated with it…

  • Direct mailing costs (i.e. stamps, priority mail rates, statement reprints)

  • Indirect mailing costs (i.e. days sales outstanding)

If you find the correct address, you still have to go through the remailing process. You’ll also have to extend their due date to ensure they can make payment. Both of these steps increase the time it takes to receive what's owed to you.

Solution: Use Address Suggesting and Skip-Tracing Services

To avoid the USPS returning mail, research address correction services. Solutions exist that automatically correct address errors before mailing.

These services also offer the ability to look-up new addresses using skip-tracing logic. In a nutshell, these skip-tracing services gather intelligence from partnerships with massive data collection agencies that gather data from...

  • Magazine subscriptions

  • Mailing lists

  • Address request changes

  • Mobile apps that require accounts

As an example, a patient moved and changed their delivery address for their TIME Magazine subscription. Since the skip-tracing service looks at magazine subscriptions, it'll suggest their new location.

Problem: USPS Service Disruption Alerts

Certain circumstances happen that remove the ability to send mail altogether.

Sometimes the USPS will declare a disruption in their services due to a natural disaster or other emergencies. These disruptions are something to keep in mind if you collect patient payment through the mail.

The alerts happen on a state-by-state basis and are often unavoidable. But, when the USPS declares a Service Disruption Alert, they are displayed on their website.

Solution: Emphasize Electronic Statement Delivery

You may be wondering, “After I send physical mail through the USPS it’s entirely outside of my control. Why should I even send paper statements through the mail?”

You’re not wrong. Other than receiving IMb delivery updates as your statements travel from one distribution center to the next, you really can’t control how or when your statements get delivered.

Even though many people still prefer paper bills, offering electronic statements helps avoid patient payment delays.

As technology continues to advance so does people's knowledge of how to use it. So it’s safe to say that most of your clients will also understand what to do when they receive an electronic bill.

With that in mind, by sending paper statements you’ll appease your patients who prefer that form of delivery.

But adding electronic versions gives you more control. Also, you can ensure that your clients receive their bills on time, without having to worry about pesky delivery delays.

Problem: Accepting Very Specific Forms of Payment

Cash, check, Visa, Mastercard, American Express, Discover, PayPal, Apple Pay, Google Pay, Venmo, Bitcoin, DogeCoin, etc.

You could spend all day listing different payment options available to consumers. In fact, since the introduction of cryptocurrencies, there are more than 1,600 different types.

With so many options available, people prefer certain forms of payment over others.

If you don’t accept many forms of payment, it’s harder for patients to pay you.

Solution: Allow Preferred Payment Options

If your biggest problem is that you don’t accept enough forms of payment, the obvious solution is to accept them.

When consumers buy something from a B2C e-commerce organization, they can use their payment method of choice.

Adding additional forms of payment makes it easier to pay, thus further breaking down patient payment barriers

If you're dying to step up your payment, research payment gateway solutions. These solutions allow your customers to log in securely and pay from an online portal.

Problem: Sluggish Internal Procedures

There’s a chance that the reason it’s hard for you to collect patient payment is due to slow internal procedures.

Specifically, two internal processes that can slow down your collection efforts…

  • Not mailing or sending medical bills soon after an appointment

  • Not collecting returned payments when they come in

When trying to decrease your day's sales outstanding (DSO) every moment counts. If you have outdated procedures, you’re missing out on an opportunity to collect faster.

Solution: Establish Automated Processes

Before evaluating automated alternatives, conduct an internal audit on your patient payment process. Look at your process from start to finish with your collection team to find bottlenecks.

After identifying issues, research online or consult with others in your field that have experienced similar issues. Next, find automated alternatives that already exist and see if they fit with your business strategy.

As an example, there are many manual processes involved with paper statement delivery…

  • Designing the statement

  • Adding line items and data

  • Printing

  • Envelope addressing

  • Mailing

Some organizations hire employees whose sole responsibility is this time-consuming process.

Luckily, you can outsource the process to an automated mailing solution.

Think about how many statements you mail every day and how much time it takes. Now imagine how much time you’d save if you automated the entire process.

Conclusion

The biggest takeaway from this piece is that there’s no magic wand that, when implemented, will solve all your collection issues. We're all a little reluctant to pay large sums of money, it's natural.

Instead of being aggressive in your collection efforts, focus on more convenience. The fewer barriers of entry or effect required to pay you, the easier it will be to collect your patient payment.

Additional Readings & Sources