Studies show that hospital revenue from patient financial responsibility is up 88%– a trend that appears to be steadily rising as out-of-pocket costs are also increasing at a rate of 12% annually. This increase in patient financial responsibility has subsequently led to an increase in bad debt for healthcare organizations. Surveys continue to find that patients are having difficulty covering out-of-pocket costs which place the burden on providers. Secondary placements offer a mutually beneficial solution; giving the patients time to heal, not only physically, but financially, increases their ability to pay, minimizing revenue loss for their providers.
Primary collection efforts for healthcare organizations tend to take the shape of a 120 day internal recovery period before moving to a 12 – 24 month attempt by a collection partner. While it’s true that much of the bad debt can be resolved in this time, many organizations fail to recognize the recovery potential that occurs long after the primary collection period has expired. In fact, our in-house data shows a peak in recovery liquidation between the 24 and 48-month mark. This means recovery increases by more than 50% by extending the collection period beyond 24 months. Organizations that write off accounts within the first year or two of delinquency are dismissing significant revenue and failing to give their patients enough time to pay off their balances.
From Revenue Cycle Strategist 2019:
A great deal can happen in patients’ lives over the first year of internal and primary collections, as well as the ensuing 10 to 24 months. Remember that almost none were in the hospital by choice, and few want to abandon their debt entirely. By the time secondary placements enter the picture, finances may have stabilized enough for teams to work with patients to close out accounts that primary collections had to ignore or simply were unable to contact.”
–James Logsdon, Chief Operating Officer (COO) at Parallon and former VP of Revenue Cycle for Texas Health Resources
Our data science team uses a combination of artificial intelligence and machine learning to monitor for financial improvements that can increase the patient’s ability to pay. Trend data indicates that this occurs most often about 36 months after the initial medical treatment. With advanced financial monitoring, we have developed a proven strategy to reconnect with patients at the best time after treatment and offer them the flexible payment options they need to get back on track with their overdue accounts.
The numbers for bad debt in healthcare are staggering. Last summer, Sage Growth Partners released a comprehensive survey that identified the annual averages for bad debt for hospitals at $10 million or more. The survey also indicated that much of this revenue loss could be remedied had these organizations developed a more comprehensive strategy for recovery with a collection partner.
Healthcare providers and their patients are facing a myriad of new challenges; financial recovery doesn’t have to be one of them. We specialize in data-driven, patient-centric collections that improve the revenue cycle while maintaining strong patient relations. Contact us today to find out how we can ensure your organization creates the most mutually beneficial solution for your patient community.