Wednesday, August 24, 2011

The Collections Conundrum

Seven out of 10 hospitals and health systems collect less than 30% of their payments at the time of service, and (other than boutique private practices) it is likely that this poor collection rate is true in ambulatory settings as well. This is not a "best practice" in a time when payer policy is pushing insured consumers to pay more of their health care bill (see Out-of-Pocket Health Care Costs Up 30% From 2001-2006 for People With Private Insurance premium members) and we have a rising number of uninsured people (Nine Million Adults Joined Ranks of Uninsured Due to Job Loss in 2010 premium members).

A recent survey (TransUnion "Pulse Poll" Reveals Untapped Opportunity in Hospital Point-of-Service Collections) noted a pair of reasons that providers failed to obtain "time of service collections" – one, health care organizations had difficulty determining what the consumer owed and two, consumers were not prepared to pay at the time of service.

My observation is that the first factor leads directly to the second. If you can't clearly tell a consumer what they owe, it creates an expectation among consumers that they don't need to be prepared to pay for their services.

Yet according to a McKinsey survey on consumer views in health care, if better collections processes were in place, consumers would be willing to pay for services. According to the McKinsey survey, 74% of insured consumers are willing and able to pay out-of-pocket medical expenses of less than $1,000 a year and 90% of insured consumers are willing and able to pay for expenses less than $500 (see Consumers Can & Will & Must Pay for Services: Mastering the Self-Pay Process is a Necessity for Your Organization premium members). Consumers reported that confusion about payments and the lack of financing options for expenses are the major problems when it comes to making payments; what this tells me is that service provider organizations need to take the lead on this issue – and then consumers will follow.

Most organizations need to rethink the consumer interface for service delivery by considering ways to make the collections process simpler for consumers – health plan eligibility verification, knowledge of coinsurance requirements, and presentation of standard fee schedules. These are not new concepts in most areas of commerce, but they are a big shift for the health sector.

Sincerely,
Monica E. Oss
Chief Executive Officer, OPEN MINDS

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