With ongoing healthcare staffing shortages, many hospitals struggle to follow up with unpaid patient balances. Unfortunately, this can cause a domino effect of aging accounts receivable (A/R) which often becomes bad debt. When hospitals do have the resources to follow up with unpaid patient A/R, their focus is typically on high-dollar accounts, leaving lower-value balances overlooked.
The problem with a high-dollar strategy is over time, and with increased volume, low-dollar accounts add up—sometimes even exceeding the total dollar amount associated with a smaller volume of high-dollar balances. In addition, a new rule from the Consumer Financial Protection Bureau prohibits the inclusion of medical debt on credit reports. Hospitals may struggle if they rely on credit reports to encourage voluntary payments, as it's unlikely to be persuasive for much longer. When thinking about how to collect patient balances, hospitals need a more reliable and consist approach.
Addressing low-dollar A/R balances to improve net revenue
A proactive strategy to collecting low-dollar A/R balances is critical. By ignoring them, hospitals may miss opportunities to significantly boost revenue and improve overall cashflow. As hospitals examine how to collect patient balances more effectively, the three steps below can help move the needle on low-dollar A/R amounts.
1. Define a threshold and quantify the potential impact. By determining a threshold, hospitals can easily classify accounts that fall below this specified amount. Totaling the dollar amount of these accounts provides hospitals with the potential impact of revenue recovery. With that being said, it’s just as important to examine days in A/R because it may be more difficult (but certainly not impossible) to collect on older, low-dollar A/R balances.
2. Evaluate internal processes. Hospitals must ensure the cost to collect does not exceed the amount recovered. Here are five ways to do that:
• Consider bundling multiple small balances for the same patient so internal or outsourced billing teams can address all unpaid medical bills during a single encounter.
• Offer flexible payment plans and settlements to increase recovery rates.
• Implement self-service payment portals to reduce human involvement.
• Set minimum collection thresholds for billing teams to address. Anything below the threshold might be better suited for automated payment reminders or chatbots that follow up with patients rather than human intervention.
• Streamline workflows to minimize manual effort and reduce all aging/AR.
3. Consider an outsource partner. Outsourcing A/R follow-up—particularly for low-dollar A/R balances—is often the most cost-effective way for hospitals to recoup revenue. Why?
• Outsourcing low-dollar A/R follow-up allows hospitals to stay focused on more complex, high-dollar accounts.
• Outsource partners promote scalability and flexibility. As a hospital’s needs evolve, the right partner will help ensure financial stability during phases of change.
• Partnering with an offshore vendor is often the most cost-effective strategy. Tasking offshore employees who are adept at the patient collections process—and particularly collecting low-dollar balances—often equates to significant return on investment.
• Outsourcing low-dollar A/R follow-up is sometimes the most practical solution when hospitals struggle to recruit and retain enough staff to handle the workload effectively.
How to collect patient balances: Capturing every dollar owed
The new medical debt-credit report rule could present a whole host of patient collection challenges for today’s medical practices. Partnering with the right revenue cycle management vendor sets providers up for success during uncertain times. Learn how Global Healthcare Resource can help.