4 Best Practices for Patient Responsibility Portfolio Management
A healthcare provider’s patient accounts receivable is like any financial asset: it has a face value on paper that may not reflect how much money it is actually worth. Regrettably, in many cases as little as 40 cents of every dollar is actually collected, with 52% written off and 8% dedicated to collection costs.
Part of the challenge is that providers have historically focused their attention on collecting payments from institutional payers. Hospital revenue cycle management systems are ill-equipped to handle the diverse behaviors and expectations of what has become one of their largest sources of revenue: patients.
Collecting money from patients has proven even more challenging than many providers expected, necessitating new business strategies and processes. Even after adapting their payment practices to be more patient-focused, many hospitals are still struggling to increase fulfillment of patient financial responsibility. We’ve found that by applying classic portfolio management principles, a provider can not only collect more from their patients, they can do it faster and with less effort and expense—all while delivering a superior patient experience.
Understand the “Asset Classes” in Your Patient Pay Portfolio
Using predictive analytics, a provider can make reliable assumptions about the payment behavior of each patient. These determinations are informed by a variety of plentiful data points related to both classic credit scoring and payment history, as well as demographic, sociographic, psychographic, and behavioral data. Based on this information and the hospital’s own past collections experience, the patient accounts receivable in your portfolio can be sorted into four broad, if obvious, categories first outlined in a 2010 McKinsey & Co study:
- Willing and able to pay
- Willing and unable to pay
- Able but unwilling to pay
- Unable and unwilling to pay
After sorting patients, hospitals can then apply defined workflows for maximizing collections from their portfolio based on the expected cash value of each account and the likelihood and cost of collecting.
Determine the Baseline Cash Value of Patient Accounts Receivable
Based on this analysis, it’s possible to project the cash value of each patient account. These calculations are driven by analysis of actual collection experience with specific market segments (or “asset classes”). Providers can now have total visibility into their patient pay portfolio, with patients who pay quickly (even before treatment) at one end of the spectrum, and patients without the means or intent to pay at the other end.
Leverage Your Data with Predictive Analytics
Everyone’s been talking about “leveraging big data” for years. It’s time to turn that talk into action. Machine-driven predictive analytics enable providers to focus their collection efforts on the most valuable assets in their portfolio—and maximize their chance of collecting those amounts.
Based on the variables discussed above, providers can develop a unique patient payer persona that helps:
- Determine the patient’s propensity to pay
- Map out a realistic payment timeline
- Predict whether the patient will pay in full or in part (and how much)
- Define the best follow-up strategy, including the tone, frequency, and channel for communicating with patients
It’s tempting to view the largest balances as the most important ones to collect, and to allocate resources to collect them. However, evidence suggests that you’ll actually collect more money with less work by focusing on patients who are more inclined to pay. This is especially true when the same analytics that inform how to prioritize your work also inform the most effective collection strategies.
Patients who are able and willing to pay typically don’t require much communication—all it might take is a text or email stating the patient’s balance and how to make payment. On the other hand, patients who are able but unwilling to pay could be confused or frustrated with the amount or timing of their bill. These patients might need more explanation of their financial responsibility before they become willing to pay.
In addition to determining how and when to follow up with patients, hospitals can also make informed decisions about how to use tools like financing options and payment plans. This is especially relevant to patients who are willing but unable to pay, because they might need hands-on assistance with these matters to meet their obligations.
Optimize Your Accounts Receivable in Real Time to Maximize Collections
It’s not sufficient to just take a snapshot of your patient payment behavior and then settle on new standardized collection processes. You really need to be continually observing, recording, and analyzing patient behavior so you can adjust workflows to optimize patient financial engagement and maximize collections from accounts receivable.
Ideally, you’ll have a learning engine at the heart of your system, so when a patient exhibits a certain behavior (for example, they opened a statement 10 days ago but haven’t taken any action), that patient’s financial experience is adjusted accordingly, based on the correlation between that variable and previous outcomes.
Automation of these functions enables you to manage patient accounts from a more holistic, real-time perspective so you can continuously improve the actual value of those financial assets. With up-to-date information always at hand, your collections staff can focus their time and budget on the accounts that will yield the highest ROI, and avoid pursuing balances that are valuable on paper but only truly worth pennies on the dollar—if anything.
You can spend less, collect more, and improve another highly valuable asset—your relationship and reputation with patients—by adopting the strategies we’ve discussed in this article. It starts with understanding the assets in your patient pay portfolio and proactively managing those assets for optimal value.
Loyale Healthcare is dedicated to helping hospitals achieve these goals and turn the challenge of increased patient financial responsibility into an opportunity to build lasting trust and loyalty. I hope you’ll consider joining us on this journey.