With the healthcare economy growing at a rapid pace and costs shifting to patients, healthcare organizations of all shapes and sizes cannot afford to lose revenue to uncollected patient payment responsibility.
According to the Centers for Medicare & Medicaid Services (CMS), healthcare spending grew to $3.4 trillion in 2016 and is expected to reach $5.5 trillion by the year 2025. Specifically, patient spending in the healthcare industry is expected to grow to $608 billion by 2019. This projection reflects the increase in patients enrolled in high deductible health plans (HDHPs): In 2010, 10 million patients were enrolled in HDHPs. Fast-forward to today, 75 million patients are enrolled in these kinds of plans. Over the same period, the average deductible for covered workers with single coverage doubled from $735 in 2010 to $1,478 in 2016.
As a larger percentage of healthcare spending flows from the patient to the healthcare provider, many practices find themselves re-evaluating the way they handle the patient payment process. To maximize patient revenue, the experience for both patients and staff needs to be easy and seamless. However, achieving this is not as simple as adding staff or plugging in a new payment feature. Healthcare organizations need to rethink their collection process from head to toe.
The focus at Abilene Diagnostic Clinic (ADC) in Abilene, Texas, was to look at the numbers and determine what was working, eliminate what was not working and implement changes that would help ADC thrive in a competitive regional market.
Rethinking the existing payments and billing strategy
Trends in the healthcare payments industry offer a good idea of processes that work and those that do not. For example, patients are confused by their healthcare responsibility: In a UnitedHealthcare Consumer Sentiment Survey, only 7% of consumers could define terms such as plan premium, deductible, co-insurance and out-of-pocket maximum. Additionally, 74% of patients are confused by their medical bills.
When it comes to patient payment preferences, the healthcare industry is not delivering. Patients bring expectations to healthcare that they have in other industries. According to a 2015 McKinsey Consumer Health Insights Survey, traits that consumers value closely align between commercial and healthcare industries, including giving great customer service, delivering on expectations, making life easier and offering great value.
From an operational perspective, a process that is really hurting healthcare organizations is paper: 21% of physicians’ time is spent on nonclinical paperwork, and 87% of physicians say paperwork and administration are a key source of staff burnout.
The sentiments of the patients and staff at ADC closely aligned with these trends. The biggest challenge was the lack of a “one clinic” mindset, especially regarding patient billing. Revenue, operations and patient satisfaction suffered from disconnection in the multispecialty physician group, including about 50 providers across 14 specialties, serving 19 counties and competing with two major health systems in the region.
Patient billing challenges
ADC faced three main challenges when it came to patient billing and payments:
- No consolidated platform. Without a one-clinic mindset, each practice had its own way of doing things. This led to disconnected processes across the clinic, including patient billing. All patient billing data needed to move to one platform so that every provider could have equal visibility into patient information and deliver better service. Doing so also would help ADC shift from a “my way” culture to a true one-clinic mindset.
- Disjointed billing and collection processes. As a multispecialty clinic, ADC has many patients who come in for multiple services at a time. For example, a patient might come in with diabetic symptoms. First, he will visit with a family medicine provider who then sends him to our lab for blood work. Then he might visit a dietician to determine a nutritional plan. In the patient’s eyes, this was all part of one healthcare encounter. For ADC, this patient had three different healthcare encounters that required three separate billing and collection processes. This meant our patient would receive three disjointed statements for what he thought was one healthcare visit. Our staff would then spend hours on the phone with a confused patient who could not understand why he had so many bills.
- Poor consumer experience. Despite confusion from multiple bills, most patients still wanted to figure out how to pay their payment responsibility. But ADC did not offer them enough self-service tools to manage their healthcare bills — no patient portal for online payments nor e-statements as a billing option. Plus, the statements mailed were ugly and had excessive, complicated details about patient responsibility, which made it very unclear what amount a patient actually should pay. With statements handled by a different vendor than payment plan options, patients were confused by a lack of brand recognition. These solutions did not talk to each other, so payment plan information never showed up on patient statements, and the brand that patients associated with payment plans was different from the brand they associated with their bill. Patients were less likely to trust these different payment options because no brand loyalty was being created.
The common theme across the three main challenges is this idea of a disconnected clinic. To achieve the goal of a one-clinic mindset, ADC made three specific changes to improve care and service to boost revenue and operational efficiencies:
- Connecting everything on one platform. Using multiple vendors for payment solutions was expensive, inefficient and created negative experiences for patients and staff. ADC consolidated systems for point of sale, payment plans and statements with a single partner, which simplified the vendor relationship and contracting process and established one connected hub of patient payment data.
- Eliminating multiple bills. To reach a one-clinic mindset, ADC created a payment experience that connected all services that the clinic offers. Patients receive one consolidated statement that reflects their entire healthcare encounter instead of multiple statements for each service rendered. Now when patients receive a bill from ADC, they see all of their balance information for all services rendered in one, easy-to-read statement (See Figure 1). Patients better understand their payment responsibility and are no longer bombarded with multiple statements for each healthcare service. Patients also can opt in to receive e-statements instead of paper statements. These statements deliver a consistent experience with consolidated balances and make it even easier for patients to pay their responsibility in just a few clicks.
- Expanded self-service tools. ADC wanted to offer patients more self-service options such as online payment tools to empower them to manage their healthcare bills. ADC added a patient portal for online payments. Now when patients receive a bill from us in the mail, or when they have a monthly payment due for a payment plan, they can log on to our portal and easily make a payment with their preferred payment method. The new consolidated statements also help drive traffic to the portal with an easy-to-read URL.
Not only is this a better experience for our patients, but ADC staff also see the benefit. Many of their processes that used to be manual are streamlined. Rather than mailing payment receipts for each transaction, staff can look up a payment and email receipts to patients.
By changing the way ADC handled patient billing, the clinic has increased revenue, cut costs and improved the patient payment experience, including a 21% increase in patient payments from January to June 2017. More patients are making payments, including patients with balances beyond 90 days past due. Days in A/R have declined from 32 to 25 days, yielding increased cash flow. ADC saw a 36% decrease in statement costs in the first six months of the new billing process. By consolidating statements, ADC significantly cut print and mail costs. Healthcare encounters that once required three to five initial statements now only need one. Finally, patients are much more satisfied with their billing experience, which is translating to increased overall patient satisfaction and the critical step toward ADC being viewed as one clinic.