The new HFMA report diagnoses the healthcare industry as a “severe condition” and provides a link to the collection costs facing nationwide declines in affordability and increased patient bad debts and providers.
HFMA analysis reveals that the healthcare industry is in a “severe state” when it comes to affordable prices and ability to meet current and future service demands.
A new initiative from the HFMA, US Healthcare Vital Trackers has acquired the country's healthcare industry at 35.9 out of 100, a sharp decline from a 1997 high of 90.8. The main factor behind this decline is a decline in affordable prices.
For revenue cycle leaders, this means more debt, higher costs to collect, and greater financial risk for providers.
Issues like rising premiums and managed waste may appear to be within the scope of payers and policymakers, but they have significant impacts on the revenue cycle sector.
How affordability issues affect revenue cycles
A central issue for revenue cycle leaders is the cost shifts that have occurred over the past few decades. As healthcare costs increase, the financial burden is primarily decreasing on patients. Patients are notoriously difficult to collect and expensive.
The three main drivers, the decline in affordability and impact on revenue cycle management, are:
Insurance design promotes bad debts: The trend towards deductible health plans is to transfer more medical expenses directly to patients. This means that the average patient is responsible for most of the bill. This increases the likelihood that your account will end up in a collection and will ultimately be amortized as bad debt, putting directly pressure on KPIs related to cash collection and days in A/R. Managed Waste Increases Patient Costs: Management costs due to complex claims and insurance processing practices also affect healthcare affordability. These costs lead to higher premiums and out-of-pocket costs for patients. This will allow providers to expand their recall efforts. According to data analyzed by HFMA, patient complaints increase the cost of collection. Confused and dissatisfied patients are much more likely to delay payments, challenge bills, or request multiple calls or statements to resolve their account. This affects the cost of the healthcare system to collect.
Strategic response to revenue cycle leaders
To combat the broader affordability issues, there are no silver bullets available to revenue cycle leaders, but there are several steps to mitigate the risks associated with financial stability in the health system.
Improved transparency to reduce payment delays: By proactively providing accurate cost estimates before providing services, providers set clear expectations. If patients understand financial liability before the bill arrives, they are more likely to pay quickly and are less likely to challenge the charges. Accessible financial support to reduce bad debt: Many patients, especially those with HDHPS, are underinsured. They have compensation, but they lack cash to pay a high deductible amount. By making financial assistance more flexible and accessible, revenue cycle leaders increase the likelihood that patients will pay. Personalized communication reduces collection costs. Automated communications provided according to the method of patients' preferences helped several healthcare systems reduce the costs associated with sending statements.
The HFMA report reveals that revenue cycle leaders must adopt new strategies beyond traditional collection tactics. By moving the economic conversations between patients and upstream patients, the healthcare system can improve the patient experience in ways that increase the likelihood of paying bills.
