How to lower bad debt at your hospital or clinic

With higher deductibles, rising costs and new technologies and CMS moving cases to the ASC setting, many not-for-profit and critical access hospitals are noticing an increase in bad debt. Here’s how to lower that amount and accelerate cash. 

Are you the bank or the local healthcare provider?

When patients don’t, won’t, or can’t pay

More than a third of hospitals rack up at least $10 million in bad debt each year, and half don’t expect to recover more than 10% of it from payors or self-pay patients. Only 9% of U.S. hospitals are successful recovering more than 20% of their bad debt, which means most of the money is being written off. This is coupled with the fact that about 80% of hospitals have no established procedures and insufficient staff to execute the procedures to recover their bad debt in house.

When turned over to a third-party agency, often the agency cherry picks which accounts to work to pursue. The small balance accounts are often ignored and the large balance accounts may not be collectible because the patient lacks the cash in hand to pay what is owed. At the same time, their contracts don’t allow clawbacks of the account so the smaller balances languish and are eventually written off due to lack of attention and effort. Still other agencies won’t take secondary (or older) placements.

At the same time, most American households are unable to pay a $400 medical expense expected or unexpected, from the current balance in their checking account. What’s a hospital to do?

Disruption in patient financing

I’ll bet any of you reading this article have heard of Care Credit, and are familiar with one or more medical financing companies that buy medical accounts receivables at a discount. But there are a few drawbacks: 

  • The often want to give back the accounts that don’t pay up (recourse) and sell them back to you.
  • They don’t accept more than about 40% of the patients who apply.
  • They charge really high interest fees after a short honeymoon period.
  • They do a hard credit check, and
  • They report bad debt to the credit bureaus.

What if you could wave a magic wand, have patients with high unsatisfied annual deductibles apply for assistance and 97% of them be approved within minutes if they have a job and are able to pay 25% of their deductible or copay on the spot with a credit or debit card. 

What if you could offer them 0% interest and 9-12 months to pay biweekly or monthly for amounts up to $20,000 and you didn’t have to manage these accounts internally? 

What if money came to you 50% on day of loan approval or date of service, and the balance paid to you over the next few months – without recourse and without the labor required to chase or rebill. Each month, payments through the program just “arrived” like clockwork as ACH transfers to your account with a reconciliation voucher?

I've discovered a disruptive solution to healthcare bad debt!

I’ve been working with a patient financing firm who does just that. Patients apply in minutes right from your waiting room and 97% know within minutes if they are approved and the terms of their repayment come as no surprise because they chose the repayment terms, themselves.

If you implement this program, you might be less reluctant to offer cash pay terms for the uninsured or underinsured who are honorable, working class people who don’t have cash in full at the time of service, and want to pay their bills – if only there was a way to:

  • not have to tie up their credit card (if they have one) limits
  • not have another hard inquiry on their credit report
  • may have less than stellar credit, and 
  • pay up on money owed from previous service encounters that remain unpaid 
You owe it to your organization or business and to your community to offer this more humane option and improve cash flow overnight and let your internal revenue management staff work on other, more complicated and specialized revenue management tasks. Call me and get this vetted solution implemented. I won’t charge you a penny for my time and our chat will take about 15 minutes. There’s no pressure or obligation. If it’s not for you, that’s fine too. But what if it’s just the solution you need to start collecting more and lower your bad debt? Can you afford to dismiss it without any investigation?

Black Friday

ALL MASTER CLASSES in 2020!

2 for 1 Course Registration

Expires 6pm MST December 6, 2019