Hospital CFOs and their teams almost always have their hands full as they focus on getting patients in the door for care and collecting timely payments from patients. These essential collections and payment functions are even more critical during and after the pandemic, as many revenue-generating services have been diminished. In some cases, CFOs had to recommend layoffs and pay cuts to counter pandemic-driven reductions in revenue. With vaccine distribution underway, CFOs are looking to optimize their back-end operations to reduce the cost to collect.
In a recent HFMA forum, several revenue cycle experts cited examples of innovation and process improvements as side effects of changes made during the pandemic. More specifically, leaders cited expanded online scheduling, expanded telemedicine, and work-from-home models for non-clinical staff as positive changes. However, one area that ranked high on the wish list of strategies was to lower the cost to collect.
The median cost to collect (2011-2017) is 3%. For poorer performing hospitals, the cost to collect can be more than 4%. The emerging strategy of using digital tools to engage patients earlier has proven to be successful in reducing collection costs. Such efforts also promote patient engagement and improved satisfaction, which bring their own financial impact.
Why It Pays to Engage Patients Digitally
Several surveys, including the U.S. Bank Healthcare Insight Survey Report 2020, found that about two-thirds of patients are still informed about their co-pays by mailed billing statements. However, there is compelling evidence that engaging patients digitally, through the channel they prefer, reduces the cost to collect.
- Giving patients the option to receive bills digitally (via email or text) helped this health system reduce printing and mailing costs for paper statements by more than half.
- Sending digital-first bills to patients helped this health system accelerate collections, cutting average days to pay in half.
- An intuitive online payment portal helped this health system triple its self-service payments with no burden on their team.
What CFOs Want
CFOs aren’t especially happy with the current business office status quo either. For 74% of provider claims, patient collections take more than a month. About 50% of CFOs want easier access to reports, better dashboards, and enhanced ability to drill into collection and payment data. Engaging patients digitally is key to these initiatives. With digital outreach, health systems can collect and use data, such as an opened email or a clicked link. This data helps finance leaders understand when patients respond, when they pay and begin to understand why. Then, they can use this data to improve billing interactions with patients, which is crucial to reducing cost to collect.
Furthermore, an article in HFMA notes that 75% of healthcare leaders seek to implement AI to reduce the cost to collect. Of particular interest, 43% report their “first area of focus” will be to automate business processes to reduce costs. HFMA offered strategies for incorporating AI and data analytics to improve the revenue cycle. These include:
- Replace traditional manual tasks through automation so team members can work on higher-value functions. It’s estimated that providers could save upwards of $10 billion (think cost of collection) by automating essential revenue cycle functions. Today’s status quo relies on manual claims management and payment reconciliation functions, which are subject to errors.
- Rely on AI to stop denials. Denials not only stress patients but also increase the cost to collect. On average, its $118 per claim in administrative costs for a denial, which impacts about 10% of claims.
- Personalize the patient experience. Data can automatically determine the right billing approach for each patient based on past payment behavior. Half of all patients are concerned about paying their hospital bills. But, a personalized strategy that is also scalable can increase collections.
Ready to Reduce Your Cost to Collect?
By vertically integrating payments within its software, Patientco offers health systems greater connectivity and advanced analytics so that they only need one patient payments partner and technology platform. This eliminates inefficiencies, improves the quality of the interactions with patients, and provides insights for better patient billing strategies at pre-service, point-of-service and post-service. Given the comprehensive nature of the platform, Patientco improves financial care across the entire patient journey and increases payments and revenue for leading health systems.
Ready to reduce cost to collect for your organization? Get started with a brief consultation with one of our payment experts.