Taking Charge of Patient Financial Management Catering to Patients as Consumers While Increasing Volume and Revenue
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Agenda • • • • • • •
The Current Market Consumerism in Healthcare Patient Financial Engagement Best Practices Workflow Collection Performance Reporting Active Retail Consumer Engagement Strategies Engagement Strategies to Maximize Collections Consumer Credit Regulations
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Introducing Your Speaker: Dan Kutchel • RVP for CarePayment, a patient •
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Dan Kutchel RVP - CarePayment 440.476.1701
[email protected]
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financial engagement company 15 years of sales, sales management and marketing experience in the healthcare revenue cycle industry Previously held executive sales and leadership positions with Crowe Horwath, LLP, Horizon Financial Management, McKesson, Ernst & Young, and Outsourcing Solutions Inc. B.S. in Business Management and MBA from the University of Phoenix Member of HFMA
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Informal Poll • Are Self-Pay balances a challenge?
• Is your reporting adequate? • Do you have the staff to collect effectively? • Are there some things you feel you could be doing
that you are not regarding Self-Pay? • What type of payment options do you currently offer?
• How are you managing point of service collections?
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Learning Objectives • In today’s session, you will learn more about the
following issues relevant in today’s marketplace: – Understand the affordability gap created by surge in high deductible health plans – Prepare for the “consumerization” of healthcare – Recognize the growing need for patient financial engagement – Learn about your responsibility to comply with consumer credit regulations – Identify how to increase volume and revenue despite these challenging market trends ©2015 CarePayment LLC. All Rights Reserved. Confidential & Proprietary
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The Healthcare Affordability Gap For Providers
For Healthcare Consumers
ACA is driving explosive growth in self-pay receivables. 80% of HIX enrollees have chosen silver or bronze plans1 with family deductibles averaging $6,078 and $10,386 respectively2.
In 2013, Americans named cost as the most urgent health problem in the nation. 33% of Americans or their family members put off medical treatment in 2013 because of cost; 22% for a serious condition6.
85% of hospitals either have no monthly cash collection goal or consistently fall short of their goal3.
50% of Americans can’t come up with $2,000 in 30 days – ~25% report income of between $100k-$150k7.
In 2012, US hospitals provided $45.9 billion in uncompensated care, 6.1% of their annual expenses4.
49% have less than $1000 to pay for unexpected out-of-pocket medical expenses, and 53% would need to borrow from a 401(k) and/or use a credit card 8.
As the number of insured with high deductible health plans doubled to 20% in 2013 from 10% in 2009, the average median debt for providers rose 44% to approximately $39 million5.
40% of consumers have medical debt, with a majority owing $2,000 or more9. 57% of all bankruptcies are due to medical debt10.
Sources: 1. Health and Human Services Department, January 13, 2014 2. HealthPocket 3. “Funding Your Mission,” RelayHealth and Healthcare Finance News 2013 4. AHA “Uncompensated Hospital Care Cost Fact Sheet,” January 2014 5. Moody’s Investor Service, March 2014
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6. 7. 8. 9. 10.
Gallup Poll December 2014 National Bureau of Economic Research 2013 Aflac Workforces Report 2014 US Census 2011 County Business Patterns Nerdwallet Health study, June 2013
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Three Waves of Consumerism Three Waves of Consumerism in Healthcare 1st Wave: Rise of Consumer-Directed Health • Transition driven by introduction of CDH plans and various cost-sharing mechanisms • Early CDH plans had minimal success in getting consumers to manage their health
2nd Wave: Initiating Transparency & Engagement
3rd Wave: Enabling a “Fully Retail” Industry
• Consumers learn to “shop” and navigate the healthcare system • New demand for solutions to support consumer decisions and provide transparency
• Need for a “retail” approach as balance has shifted toward the consumer • Personalized approach to address individual needs and drive engagement
Consistent theme: Focus on patient satisfaction in financial engagement
Are you ready for a fully retail healthcare industry? Source: TripleTree, LLC
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Affordability Gap + Consumerism = Necessity of Patient Financial Engagement •
Price Transparency 95% of patients surveyed* say it is important to know their costs upfront.
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Flexible Financing 96% of those surveyed* feel it is important to understand their payment options in advance. People expect to have financing options when making purchases, including healthcare. Enable them to get the care they need, when they need it, without financial concerns standing in the way.
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Personalized Experience Pre-service financial intelligence coupled with flexible financing solutions enable providers to help patients find affordable options for managing medical expenses.
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Convenience Consumers expect to pay in a variety of ways, including online and via mobile devices. Options like automatic payments, eStatements, and paperless billing are basic expectations. *Based
on survey of more than 400 CarePayment account holders, August 2014.
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Patient Financial Engagement Best Practices Workflow
Nurture
Promote
Connect
Manage
Estimate
Engage
Identify
Confirm
Offer
Evaluate
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Best Practices Workflow Communicate Communicate Nurture
Promote
Manage
Connect
Promote Engage
Promote financial options pre-service, via community marketing, facility signage, public relations, and online.
Estimate
Confirm
Connect
Connect with patients early through multiple channels: in person, online, via phone.
Estimate
Estimate balances pre-service so patients can make informed, confident decisions about their care and payment options.
Identify
Offer
Evaluate
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Best Practices Workflow Navigate
Nurture
Navigate Promote
Manage
Connect
Identify Engage
Identify patients with Identity Validation tools to reduce medical fraud and optimize collections.
Estimate
Evaluate Confirm
Identify
Offer
Evaluate
Evaluate ability to pay and likelihood to qualify for financial assistance with screening and segmentation tools.
Offer
Offer payment options customized to the patient’s unique needs.
Confirm
Confirm patient’s action plan for paying their bill, including participation in a financing plan.
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Best Practices Workflow Capture
Capture Nurture
Promote
Manage
Connect
Engage Engage
Engage patients post-service with online and offline tactics to reinforce their plan and offer resources
Estimate
Confirm
Manage
Actively Manage patient accounts by sending statements, following up on past due balances.
Nurture
Nurture patient loyalty by providing access to financial options that accommodate repeat business.
Identify
Offer
Evaluate
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Pool Liquidation Report
Monthly Activity Report
Comparison: Monthly Activity Report vs Pool Liquidation Report
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Collection Performance Reporting Summary •
Why use a Pool Liquidation Report? – Reveals the aging of collections of a given placement or pool – Gain insight into your recovery rates as the receivables age from discharge.
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Require monthly activity reports and pool liquidation reports from vendors or your reporting group to understand cash flow and performance by aging – Note: Many times payment plan collections are included in your Monthly Activity Report, skewing the collections for the month upward. Payment plans should be accounted for separately with historical default rates applied appropriately.
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Pool Liquidation Analysis: Leveraging your Performance History Pool liquidation Analysis •
Segmentation by: – Financial Class – Service Location: Inpatient or Outpatient – Service Line – Primary Insurance – Employer
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Payment Method Utilization: – – – –
Age Balance size Financial Class type Location Profile
• 35% of CarePayment Patient Cycle Analysis participants do not break down collection performance by financial class • Patient accounting systems prohibit tracking by financial class • Co-Pays have become high deductibles, commonly referred to as “slow pays”…..
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Why patients don’t pay In many cases, patients want to pay the bills, but have a number of reasons why they don’t: Stated reason for non-payment
Percent of insured respondents
Lack of financing options 37 I just received my statement 19 I forgot to pay or I was confused about what I owe 17 Healthcare is a right. I shouldn't have to pay my bill 8 Other 19
Source: McKinsey U.S. Healthcare Payments: Remedies for an Ailing System, April 2009
0
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Improved Financial Performance Financial Impact Analysis: Early Engagement Without Patient Financing Option
With Patient Financing Option
Collections 36%
Bad Debt Expense 64%
0%
Bad Debt Expense 15%
Collections 85%
77% Reduction in Bad Debt Expense Based on CarePayment Patient Cycle Analysis data between August 2012 and March 2014. Sample included 45 healthcare providers, 1.25 million patients, and $5.85 billion in total charges.
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Improved Financial Performance Financial Impact Analysis: Late Stage Engagement Without Patient Financing Option Total Fees 0%
Bad Debt Expense 95%
With Patient Financing Option 0%
Collections 37%
Collections 5%
Bad Debt Expense 63%
34% Reduction in Bad Debt Expense Based on CarePayment Patient Cycle Analysis data between August 2012 and March 2014. Sample included 45 healthcare providers, 1.25 million patients, and $5.85 billion in total charges.
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Standard POS collections
BAD DEBT
PRE-BAD DEBT
SELF-PAY DETERMINATION
PATIENT ACCESS
Insertion Points for Patient Financing Options
• Co-pays • Deposits • Prompt pay discounts • Charity care
Promote patient financing options at various stages
• • • • • •
Pre-registration Point of service Discharge Post-service patient inquiry Statement messaging Pre-bad debt
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Patient Financing is Strategic •
Market your financial options as a cornerstone of your retail strategy – Competitive differentiator in the market – Encourages repeat business – Removes financial barriers to obtaining timely medical care – Engages patients as consumers
“We were competing with the furniture store down the street and its two-year financing at zero percent. Without the same financing option at our hospital, people were buying a couch before taking care of their health.” - Dan Hogan, CFO, DeSoto Memorial Hospital
Financing is a familiar and effective component of the retail experience.
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Research • What does the consumer research say?
– Retail shift occurring in healthcare: “patient-friendly” to “consumer-friendly” – Consumers want more information and options that meet their needs – Transparency is key
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Research, continued Attitudes – Most consumers are frustrated by healthcare costs and can relate to challenges caused from high out-of-pocket medical expenses – However, even those who have experienced multiple collection attempts for outstanding medical bills do not harbor ill will against the provider – They understand that these bills need to be paid, they just don’t have the money to pay them right now – Many admit that they have chosen not to seek medical care because they do not have the money to pay for it ©2015 CarePayment LLC. All Rights Reserved. Confidential & Proprietary
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Research, continued •
Your brand is powerful – Patients trust you – When your logo appears on billing materials, it creates stronger engagement - materials are more likely to be opened and read
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Simplicity and transparency are key – Participants want payment information to be clear, simple and transparent – Communicate pricing and payment options early and often; 96% want to know the price and 95% want to know their payment options up front – Offer clear direction and multiple channels for taking next steps and finding contact information
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Engagement Strategies to Maximize Collections Front-End/Point of Service • Don’t be afraid to ask for money; patients expect to be asked to pay their bill – Once a patient leaves the building, the likelihood of recovery goes down significantly • Give the patients options so they can’t say no – Cash, Check, Charge – Negotiate with the patient – Be willing to offer prompt pay discounts – Providers are increasingly giving prompt pay discounts to self-pay after insurance balances ©2015 CarePayment LLC. All Rights Reserved. Confidential & Proprietary
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Engagement Strategies to Maximize Collections Front-End/Point of Service (cont’d) • Allow them to pay over time, interest-free – Leverage patient financing as an additional tool to engage patients – Average collection rates, regardless of Financial Class are 5975%. • Strategic Engagement – Offer patient financing for subsequent services, physician visits or new service lines that are being built up – Maintain revenue, increase collections, and increase patient satisfaction and loyalty ©2015 CarePayment LLC. All Rights Reserved. Confidential & Proprietary
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Engagement Strategies to Maximize Collections Back-End/Post Discharge Maximize collection efforts based on detailed pool analysis • Emphasize payment in full for SP within first 30 days of billing and 60 days for self pay after insurance • Once collection performance begins to diminish, adjust collection strategy. – Fewer people are going to pay as the receivables age if you don’t try to engage them in a different manner – Increase payment options as receivable ages to increase engagement
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Engagement Strategies to Maximize Collections Back-End/Post Discharge (cont’d) • Give patients the option to finance their out of pocket expense instead of going to collection • Engage patients based on margin contribution and revenue growth opportunity, making front end collections easier. • Give them something that they can re-use so that when they come back in the front end collections is easier and more rewarding for your organization.
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Compliance with Consumer Lending Regulations As patient financial responsibility increases, healthcare providers are looking for ways to bridge the financial gap for their patients and for themselves.
Did You Know?
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Regulatory agencies and plaintiffs lawyers are increasingly focused on consumer credit policies and practices.
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Whether you offer payment plans directly or outsource to a third party, you must comply with many state and federal consumer credit regulations.
• Truth in Lending Act / Regulation Z • Equal Credit Opportunity Act / Regulation B • Office of Foreign Assets Control (OFAC) • Gramm-Leach-Bliley Act / Safeguards Rule • Bankruptcy Code • Service members Civil Relief Act • State Debt Collections and Servicing Laws
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If you offer payment plans of four installments or more, you are considered a creditor and are subject to consumer lending laws and regulations including:
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IRS 501(r): What You Need to Know • Financial
Assistance Policy • Extraordinary
Collection Efforts • Notifications and
Timelines • Debt Sales and
Compliance ©2015 CarePayment LLC. All Rights Reserved. Confidential & Proprietary
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Takeaways •
Patients will be paying more of the bill and will approach healthcare market as a consumer
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Patients want to know the price and their payment options as early in the revenue cycle as possible
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Consider advanced reporting methods, such as Pool Liquidation Analysis for better tracking, benchmarking and analysis
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Adopt retail best-practices, such as patient financing, to meet financial needs and bolster patient loyalty
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Be aware of consumer credit regulations and ensure your payment plans are compliant
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Q&A Dan Kutchel RVP - CarePayment 440.476.1701
[email protected]
http://connect.carepayment.com/dan-kutchel.html
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