To any physician practice, every dollar counts. Collection rates are falling as deductibles rise, especially for those in high-deductible health plans (HDHP) — a double hit that providers can’t afford.
High-deductible plans, coupled with copays and payments due following claim adjudication, mean that practices still need to collect significant revenue throughout the patient journey. For 2023, HDHP plans carry $1,500 individual/$3,000 family deductibles and annual out-of-pocket expenses of $7,500 individual/$15,000 family.
That’s a lot of in-office visits and procedures that patients on HDHP plans will be paying for out of pocket before insurance kicks in or maximum outlay is reached. Even those with more traditional insurance are paying higher deductibles and copays.
Like most practices, Virginia Physicians for Women (VPFW) — an independent, multi-location OB/GYN practice — was challenged by the increasing amount of patient account balances and by manual processes surrounding collecting, tabulating, and recording payments that threatened the independence of the practice. Since finding a technology solution that integrated with its EHR, the practice has increased payment transactions by 20% and saved 20 hours a week in staff time while maintaining secure payment policies.
The cost of manual payment workflows
More than half of American adults (56%) are unable to pay an unexpected bill for $1,000 with savings, a finding that has held steady over the past several years.
Among hospitals, collection rates for self-pay accounts after insurance dropped from 76% in 2020 to 55% in 2021. At the same time, the percentage of balances over $7,500 grew from 5.2% in 2018 to 17.7% in 2021. Self-pay after insurance accounts comprised 60% of patient bad debt in 2021, a 450% increase from 2018.
The InstaMed Trends in Healthcare Payments Twelfth Annual Report shows that nearly half of American households had healthcare expenses in the past 12 months, with 17% owing more than $1,500. The same survey indicated that nearly one-third of Americans declined to seek medical care due to cost.
With these stats in mind, VPFW and other healthcare providers face considerable headwinds to effective patient collections. VPFW’s leaders realized that increases in patient balances were threatening the future independence of the practice. The collections process was expensive and time-consuming, with many required manual actions — to the point that leaders recognized that sending paper bills for balances under $5 was not cost-effective.
Because VPFW wanted to capture payment data in its practice management (PM) system, payments had to be posted manually, which took each staff member one hour daily. Reconciling payments was also manual, and if the balances did not match, finding and correcting any issues typically required an additional hour.
Practice leaders knew there must be a better way.
Saving time and increasing collections by 20%
The practice found a payments partner that integrated with its PM system to streamline formerly manual processes. Now, payments automatically roll to the PM system, regardless of where the payment was taken or through what method. This eliminates manual data entry and reconciliation, saving staff 20 hours a week. It also greatly reduces the chance of keystroke errors that can throw off balances.
By offering more convenient payment methods to patients, the practice has seen its collections increase by 20%, including those less-than-$5 transactions that add up. The system also offers enterprise-wide visibility into payment collection trends in real time.
Patients can pay at the point of service but also use self-service tools to submit payments electronically by e-check or credit/debit cards. By accepting credit cards, physician practices fall under governance from the Payment Card Industry Data Security Standard (PCI DSS), an information security standard for organizations that handle cards from major credit card companies.
Organizations that accept credit cards must meet 12 standards within PCI DSS, a combination of people, processes, and technologies designed to safeguard cardholder data. VPFW leaders say using an integrated payments provider makes complying with PCI standards much easier.
Disconnect between practices and consumers
Regardless of specialty, medical practices have fallen behind consumer willingness and desire to receive and pay their bills with the least amount of friction and hassle.
Consider these statistics from the Trends in Healthcare Payments Annual Report:
- 75% of providers primarily use paper and manual processes for collections.
- 74% of providers say it takes more than one statement to collect.
- 70% of consumers receive medical bills via mail, but only 9% of consumers want to pay that bill with a paper check.
- 1 in 4 consumers ended a transaction for a medical bill because they couldn’t pay with a credit/debit card.
While four in 10 providers say their billing and collection efforts have no impact on the patient experience, nearly 50% of consumers say they would consider changing providers to those that offer a better payments experience.
Younger consumers — the future of medical practices — feel much more strongly about their payments experience. Only 27% of Baby Boomers would consider changing practices based on billing experience. However, 74% of Millennials, those born between 1981 and 1996, say they would make the switch. Overall, 87% of consumers want to make all their healthcare payments in one place, according to the InstaMed survey.
Patients will continue to bear more of the cost of their care absent fundamental changes occur in the U.S. healthcare insurance marketplace. Paper statements and snail mail collections result in significant cost and manual work for practices, without an obvious return. Physician practices can increase collections, save staff time, and better satisfy patient expectations by offering modern billing and collection methods.
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