Consultants vs. Collectors: Expanding Payment Options for Self-pay Patients Improves Balance Resolution

Consultants vs. Collectors: Expanding Payment Options for Self-pay Patients Improves Balance Resolution

One of the keys for creating a positive patient experience is expanding payment options—and providing a consultative approach.

When it comes to strong self-pay strategies, helping patients meet their financial obligations means offering payment alternatives that best fit their needs. That means offering cash, check and payment plan options in addition to accepting credit cards and debit cards for payment. It also means offering payment via all available channels: in person, over the phone, via an online portal, mobile-optimized websites or smartphone apps, and patient financing options and interest-free patient financing options.

The latest industry research shows a lot of variation in customer preference around payment, depending on age and gender. Credit cards are preferred for big-ticket items, while debit cards are preferred for everyday expenses. Men prefer credit cards, while women prefer debit cards. Meanwhile, Millennials (born 1981 to 1996) prefer debit cards over all other forms of payment. Gen X (born 1965 to 1980) are more comfortable with mobile payments (both making payments over the phone and using smartphone-based payment apps such as Venmo, Apple Pay and Google Pay) than any other generation.

Finding consumer-focused solutions for patients is important for two reasons: It fosters a solid patient relationship and makes a healthcare system more effective at collecting on patient bills.

Self-pay has grown to become one of the most critical revenue cycle management issues for providers over the past 12 years, because more of the cost of care has been shifted to patients.

In 2017, 43.5% of Americans were insured with a high-deductible health plan (HDHP), up from 14.6% in 2007. The prevalence of high-deductibles is spurring an increase in out-of-pocket costs for patients. Patient Balances After Insurance (PBAI) have grown from 8% of the total patient bill amount in 2012 to 12.2% of the total amount in 2017.

That increased patient obligation is shifting the composition of hospital revenues and receivables. With median operating margins still less than 2% (1.8% in 2017), hospitals now have to manage their operations with self-pay patients, though it is widely considered a less stable source of payment. Self-pay now makes up 30% of a hospital’s revenues.

Addressing self-pay is a job across the revenue cycle, at all patient touchpoints from pre-registration to discharge and beyond. Wherever the patient’s financial obligation may be addressed, providing payment alternatives is important. Increasingly, that means mobile solutions. Fully 29% of all online payments are now made via a smartphone.

Formerly, health systems didn’t see a significant portion of their aging receivables made up of self-pay accounts. The percentage of uncollected debt owed by patients has grown dramatically, with estimates of self-pay representing 10% of a hospital’s accounts.

But self-pay patients don’t present a “collections” issue, and health systems should be wary of taking that approach or working with vendors who approach self-pay as merely a bad debt.

Working with self-pay patients requires a more consultative approach. The desired outcome is to foster a relationship with a customer who wants to remain a patient in your system.

Improving the patient experience around payment is critical to retaining patients, with 65% surveyed willing to change providers for a better payment experience. With all we know today about varied payment options and emerging solutions such as payment apps, health systems will need to consider patient preferences in developing an effective self-pay strategy.