Exclusive: Healthcare Providers Mimic Retailers to Buoy Revenue

As deductibles and co-pays keep on getting higher, healthcare providers are taking a cue from retailers’ approach to revenue: customers must immediately pay for services rendered.

For the last several years, the Health Alliance of Greater Cincinnati has been using technology to keep its revenue cycle flowing. Using both an estimating tool to increase point-of-service payments and a pre-collections team to try to collect money before performing service, the alliance is seeing a boost in its point-of-service collections, says Doug Gardner, its director of patient financial services.

Historically, private or public insurance organizations have taken care of the majority of the medical tab. As the financial burden keeps rising for the patient, the healthcare industry has started turning to a retail approach. Not surprisingly, some of the answer is found in technology.

Estimating what patients owe is “an effective tool” that is “fairly accurate,” Gardner says. Although it’s not a 100% precise, he says the alliance will refund the money or send a bill, if a discrepancy develops. “It’s an initiative for most hospitals across the country,” he says. “With the rising amount of bad debt, all hospitals are looking (to find ways) to stabilize.”

Take Hello Health, a clinic located in Brooklyn, New York. The practice allows its patients to communicate with doctors via the Internet as well as in person. However, to use their services, patients must become Hello Health members by paying a monthly fee, which is automatically withdrawn from a credit or debit card. The card on file will also get billed for using their services like office visits, house calls and email consultations. “We keep things simple, and there won’t be any surprises,” says their web site.

For those practices that don’t take a Netflix approach to revenue, estimating systems are coming in handy.

HomeTown Health, LLC is in the business of trying to help rural and small hospitals in Georgia stay financially afloat. “We identify best practices and encourage hospitals to adopt best practice solutions,” Kathy Whitmire, managing director, says.

One of best practices HomeTown Health encourages is collecting payments upfront, advising hospitals to use nTelegant to get the job done.

nTelegant’s Self-Pay Management System (SPMS) tells healthcare registrars and financial counselors what to do and say to each patient at the point-of-service regarding financial responsibilities. Whitmire says some of their hospitals are already “reaping benefits” from nTelegant. Earl Winter, founder and chief executive officer at nTelegant, says the healthcare retail approach really started to take off last year. “It’s a consumer model now,” he says, adding five or six years ago, it wasn’t a big deal to collect deductibles; now, it’s not the same scenario. “Financial counselors need to become retail clerks.”

For-Profits Keep Bad Debt at Bay

Last August, Fitch Ratings reported for-profit hospitals exhibited a solid second quarter, despite the turbulent economy. Fitch reports “providers reported continued favorable trends in volumes, pricing and bad debt expense.”

Lauren Coste, Fitch Ratings healthcare analyst, says collections seem to be stable for most for-profit providers, which she attributes, in part, to providers collecting more money upfront. “Everyone has seen the need for it over the last few years,” she says, but doesn’t attribute it to estimating tools, which she believes can’t, as of yet, account for all of the different types of insurance.

Mike Flash, vice president of corporate development at Health Alliance Plan, concurs with Coste. Although the technology is certainly out there to estimate what patients owe, getting the cooperation of different types of insurance is difficult, he says. For this to truly work, the insurance companies would have to share information in one hub.

All the same, Flash describes the ideal situation as when a patient pays at the point-of-service since he or she is less willing to pay healthcare bills later. “Healthcare bills get on the bottom of the pile,” he says. “There have to be efficiencies. It will happen. People have to cut costs.”

Flash believes gift cards could be one answer. “People buy them [giftcards] for Best Buy, why not buy them for healthcare services?” he says.

Another answer are no-interest healthcare cards, some say.

TransUnion recently teamed up with Carepayment’s Aequitas Capital management subsidiary to market a patient finance card to TransUnion’s healthcare group.

The card is focused on providing an APR of 0% to anyone with a social security number, says Mike Snitman, TransUnion’s healthcare group vice president. The card requires a patient to make monthly payments that equal 4% of the balance or $25, whichever is greater. The patient has 24 months to pay the bill off. This makes the card a “win-win” for everyone. “It helps hospitals accelerate cash collections, allowing them to give back to the community,” he says.