COVID-19 blindsided our nation. By the time we knew it was coming and that the impact would overwhelm our healthcare systems, hospitals found themselves scrambling. As of April 15, the number of COVID-19 cases in the US had risen to more than 614,180, with 26,061 deaths . While the vast majority of cases have occurred in New York, the virus has now arrived in the middle of the country, wreaking havoc on places like And Illinois, Michigan, and Louisiana. Right now, hospitals are focused on expanding capacity through alternative care sites, as well as getting much needed personal protective equipment (PPE) and respirators. Smaller cities and rural areas are preparing for their own battle as the virus continues its march across the country.
But another antagonist is looming in the background: damage to cash flow and the bottom line. It is estimated that many hospitals will find it difficult to survive for more than 60 to 90 days if the pandemic continues on its current trajectory . Even with the help from the trillion-dollar stimulus package and Medicare’s rate increase, hospitals anticipate significant financial shortfalls. For example, the average inpatient cost for a COVID-19 patient is more than $73,000. Still, the allowable charges from commercial payers is less than $40,000, and reimbursements from Medicare and Medicaid are $10,561 and $7,533, respectively . That means hospitals already struggling to collect growing patient responsibility will undoubtedly face exponential collection hardships.
37% of Americans surveyed admitted they wouldn’t be able to pay a medical bill over $100 without going into debt .
It’s now been more than two months since the first coronavirus cases were reported in the US, and that means the billing cycle for those patients will soon begin if they haven’t already. While payers have committed to eliminate co-pays and deductibles for COVID-19 treatment, it doesn’t waylay the large fees from out-of-network care in the emergency department or labs. And that means hospitals and other providers need to do all they can now to help mitigate the potential for collection nightmares.
Considering the disparity between costs, reimbursement, and patient responsibility, the potential for bad-debt write-offs in the post-pandemic world is significant.
Proactive Steps to Improve COVID-19 Collections
After making it through COVID-19, the last thing patients need is a surprise bill for tens of thousands, especially if the patient was laid off due to the virus. Receiving such bills when the patient is unable to pay rent or the utility bills increases pressure and puts a negative light on what was already a life-or-death experience.
Hounding patients for huge hospital bills after recovering from COVID-19 not only damages the hospital’s reputation but does little to improve collections.
Now, more than ever, hospitals need to rethink their approach to the patient’s financial experience. Traditional billing processes will be ineffective against even moderate balances. Sending bill after bill and then turning the account over to collections increases costs and reduces a hospital’s likelihood of getting paid in full. There’s a better way, and it’s all centered around, making it easier for patients to pay.
Nearly 90% of patients surveyed said they would consider using a payment plan, yet relatively few hospitals offer them until the patient requests one . Why would a hospital choose to wait months to collect only a fraction of the total due when they can start receiving payments right away? According to patients surveyed, the best time to offer a payment plan is at or before the first bill is sent.
An added benefit of payment plans is that patients who use them are more likely to pay on time and in full. It also helps reduce financial hardships for patients, especially important in times like these, when patients may already be struggling with debt.
Another way to help alleviate financial pressure on patients is to provide more patient-centric ways to pay. Most consumers already pay many, if not most, of their non-medical bills online. They’ve become accustomed to easy payment portals, the ability to store credit card or banking information, add additional charges to their balance, and set up payment plans themselves. Today, when getting to the post office for stamps means exposing oneself to a dangerous virus, paying online adds another level of protection.
Paying via a digital device is another option patients appreciate. Having an automated phone payment system with voice recognition technology can be beneficial for those who may want to get an update on their balance and then make a payment over the phone. This is especially helpful for patients who may have non-traditional work hours.
Another, often overlooked, way to improve the patient financial experience is by updating billing statements. Today, statements are treated like any other invoice generated by an accounting system. They can be hard to understand, and when statements are confusing, they’re less likely to get paid. The best statements are unified statements that clearly identify which charges are for which service and provider. The amount owed should be easy to find and understand. You can also add information guiding patients to the payment portal, how to set up payments, or how to request electronic statements.
Providing patient-centric payment options lets patients know their provider wants to help them afford the care they need. And this can improve patient satisfaction and increase loyalty. As hospitals and health systems try to return to business as usual, they’re going to need any competitive advantage they can get. Providing a positive patient financial experience is a great opportunity to do just that.
It’s Time for a Change, Now More than Ever
We are living in unprecedented times. Hospitals face a steep uphill battle to rebuild a depleted bottom line while, at the same time, continuing to provide high-quality care for their communities. One of the greatest opportunities to ease those efforts is to adopt a new patient collections model, especially now that patients are responsible for nearly a third of provider revenues . Making it easier for COVID-19 patients to pay for the care they received helps reduce added pressure on their already strained financial situation. It also helps lower collection costs, improve the patient financial experience, and ensure long-term financial viability.