by Melissa Masterson, Executive Director Hospital Operations
Melissa Masterson has over 20 years of process design and improvement expertise including workflow optimization and project management. At PatientMatters her focus is on front-end revenue cycle processes centering on point-of-service collections improvement through pre-access workflow technology.Q: How would you describe today’s hospital financial landscape?
A: Beginning in April, we’ve seen a lot of financial loss linked to the COVID-19 pandemic and that's led to the closing of eight hospitals across the country. Some of the challenges hospitals are facing are an increase in self-pay patients due to job loss, lack of elective procedures, along with dwindling patient volumes.
Even before COVID-19, many hospitals across the country were operating on very thin margins. A July 2020 Kaufman Hall report states the median hospital margin was sitting at 3.5% pre-pandemic. For the second half of 2020, the projection is even bleaker. If additional government assistance is not provided, the report forecasts a -7% drop in hospital margins. Furthermore, the report states that COVID-19 could challenge the viability of 50% of hospitals across the country leaving them in an economically fragile state.
Q: Why are front-end collections important to collections growth?
A: To address today’s financial challenges, hospitals need to focus on opportunities that draw in cash, which begins at pre-service and point-of-service. An effective strategy to grow collections is to coach hospital front-end staff to enhance patient financial conversations.
When we think about a rise in self-pay patients, one of the things that we need to recognize is that self-pay patients are more expensive to healthcare facilities. The collection time frame expands as self-pay patients require more hands-on attention than reimbursements from a payer. Nearly half of patients wait for more than a month to pay an outstanding balance.
To put this in perspective, hospitals send, on average, three or more statements before any payment from a self-pay account is received. Without contracts, there’s no assurance that hospitals will receive a specific payment within a specific amount of time. Hospitals are unable to plan as well as when there is a payer involved and they are dealing with contracts.
Q: What components are essential to effective patient financial conversations?
A: Patient conversations can be overwhelming and uncomfortable – especially amid COVID-19 because we know that our patients’ financial health can change on a dime right now. People are losing jobs, and people are out of work that previously had work, which means they may have lost their employer-sponsored health care or health program. So, there are a lot of complications and moving parts right now, even more than usual.
To have an effective patient financial conversation, there are three essential components to be addressed. Hospitals must train and properly equip staff with the resources to:
- Engage in patient-centered communication
- Communicate accurate patient financial obligations with no financial surprises
- Address the knowledge gap
Q: Will you please expand on each of the effective patient conversation components you identified?
Patient-centered communication
A: When the staff talks to patients, all conversations should be patient-centered which means we are asking for and understanding the patient perspective. We are aware of each patient’s concerns, ideas, expectations, and so forth. We need to understand the patient’s unique psychosocial and cultural contexts. Additionally, we need to ensure there is value alignment encompassing a shared understanding of all aspects of the patient care journey. That’s a lot for registrars to take on. That is why it's so important that hospitals take the time to educate front-end teams and provide all of the tools and resources that they need to be successful.
No Financial Surprises
A: To prevent surprises and regain patient confidence, hospitals must engage in clear and transparent patient communication. Registration and business office staff are often uncomfortable talking to patients about what their care will cost and how the money will be collected. Typically, staff will have the same vague conversation with every patient regardless of their unique financial situation. This approach can lead to anxiety for patients and low point-of-service (POS) collections for providers.
Making the shift to upfront collections and explaining to the patient why they are being asked for payment at pre- or point-of-service versus later will help improve collections.
Ideally, registration staff should contact patients before their appointment and have access to their eligibility and benefits. Using this information, along with accurate bill estimates, staff can inform patients of their specific financial obligation before their care is received.
One of the most frequent questions front-end staff receive is, “Why are you asking me for payment? You’ve never asked me for this before.” In addition to providing patients with accurate bill estimates, staff needs to be trained to address patient concerns including:
- Why payment is being requested before service
- Why financial arrangements before service are advantageous
A key component to combating surprise bills is not only providing staff with training but the tools that guide them to personalize the conversation based on each patient’s financial circumstances and level of understanding. Clear communication and compassion can help prevent surprises and prevent collection difficulties down the road.
Address the Knowledge Gap
A: A 2013 experiment, from Carnegie Mellon, Health Care Economist, George Loewenstein, illustrates the wide knowledge gap of what individuals think they know about healthcare and insurance versus what they really know. 202 people with employer-sponsored health coverage were surveyed and asked to define four basic insurance concepts: deductible co-pay or co-insurance, and maximum out of pocket in multiple-choice form. The results were interesting: 78% knew the meaning of deductible, 70% for co-pay, 34% for co-insurance, and 55% for maximum out-of-pocket, but only 14% of those 202 people got all four correct.
The survey also presented the respondents with a hypothetical insurance plan and ask them to figure out what a four- day hospital stay was going to cost. Only 11% came up with the right number, and only 14% were within a thousand dollars of the correct answer.
The survey illustrates the necessity of addressing the knowledge gap for both staff and patients. Patients can’t be expected to make informed and responsible decisions when they don’t understand the financial consequences of their decisions – nor can staff can’t be expected to educate patients on the financial nuances of care without equipping staff with the knowledge and tools they need to do so.
Want to learn more?
To learn more tips to grow your collections through staff coaching and education, view a recent PatientMatters educational webinar where Melissa shares additional insights.
