The Patient is Now the Payer: How Rural Health Systems Can Manage Unique Revenue Cycle Challenges

Sadly, 41% of rural healthcare facilities lost money in 2016, according to a Chartis Group research study. Negative operating margins can quickly translate to facility closures in areas of low population, and in the past seven years alone, around 80 rural hospitals throughout the United States have been forced to close. 

These hospitals ensure health services in rural areas, and play a major part—socially and economically—in the communities they serve. In part, due to their small size, rural hospitals are particularly sensitive to public policies and with the current ups and downs of the healthcare industry it seems the cards are stacked against them.

These health system's face unique financial challenges like physician shortages and socioeconomic disadvantages, higher than average patient uninsured rates and a larger populations of patients who have chronic diseases.

But, the picture does not need to be that bleak. Here are some of the challenges rural health system’s face and opportunities to overcome them.

Overcome Patient Socioeconomic Factors by Leveraging Technologies

Even though there is a huge increase in patient responsibility hospitals aren’t doing anything new about it. They are operating the way they always have and not keeping up with the changing demands of more consumer focused patients.

In the chart below from the Chartis study, the population health of rural communities tend to be older, financially insecure, with higher child mortality rates and younger deaths compared to non-rural communities. These statistics point toward reasons why rural health systems report difficulty in collecting patient payments—on average rural areas suffer from financial disparities and poorer outcomes than their non-rural counterparts.

Comparison_of_Pop_Health_in_Rural,_Non-Rural_Hospital_Communities,_Chartis_Group


Rural markets are also smaller, with lower patient volumes, so each dollar of revenue
not collected, hurts the bottom line all the more. 

Patient pay technologies can alleviate a lot of the collection problems that rural facilities face. However, to purchase technology enhancements is cost prohibitive for a small facility to make these investments. Partnering with an outsource firm, who has the technology in hand will provide access to patient pay tools like:   

  • Online portals, price estimators, and payment plan tools

These allow patients to pay their bills, check their balance, combine invoices and set up payment plans all through self service portals, and  customization based on provider policies. Price estimators help patients budget and understand their financial responsibility before services are provided.

  • Sophisticated phone systems, auto-dialing campaigns, and patient segmentation tools

Payment IVRs let patients pay their bills without talking to a human being. Segmentation tools create campaigns and workflows to reach out to patients with the right touch at the right time to increase likelihood for payment.

  • Creatively designed patient-friendly billing statements and delivery options

A clear and well-designed patient statement increases likelihood for patient payments by offering the pertinent information in a clear and easy to understand format. eStatements, mobiles apps and text payment reminders all add retail-mirrored convenience options that patients expect from other industries and increasingly demand from healthcare services.

From account management and scrubbing, to propensity to pay, interactive voice recording (IVR), speech analytics, payment portals, heat-mapping statement software and far beyond, the technologies a partner brings to your engagement will inevitably boost your operational performance.

Overcome the Challenge of Your Staff Asking Patients for Money

In small rural areas with low populations, most people know each other and it poses difficulty when entering the medical system. A sensitive situation arises when the hospital is a major employer and people who know each other personally, are suddenly tasked with financial counseling or asking for medical payments—either in person or by phone.

It is a difficult thing to do. In fact, there are rural hospitals that base a portion of their business plan on being nicer than their competitors because they aren’t asking for time of service payments. Those perceived meaner competitors are the ones collecting the cash though. it does not have to simply be one or the other, there is a balance.

In an outsourcing  engagement there are countless options for managing your existing staff and promoting best practices and education on the art of collecting on medical balances. Outsourcing alleviates the stress of hiring and retaining qualified staff—especially out of a potentially smaller talent pool.  Re-badging your existing staff is often a great choice, as it creates big wins for you and your employees. For instance, this provides opportunity  for your local people to have access to world-class technology along with best practice policies and procedures,  and expansive revenue cycle experience from other clients across the country. 

 Fence and horses along a country backroad in rural York County, PA.

Overcome Value-Based Care Implementation Challenges, Reporting Issues, and Physician Shortages

CMS recognizes that rural health systems may need additional assistance to perform—or even stay in operation. Four programs were created by CMS including Medicare-Dependent Hospital initiative, which pays greater than the regular Medicare system rate to those hospitals with fewer than 100 beds and 60% of patients on Medicare—but funding has been cut for this program as of April 2018. The other programs benefit critical access hospitals, geographically isolated hospitals and large rural facilities to receive “disproportionate share” hospital payments.

The issue with Medicare dependent hospitals is that they are having greater difficulty transitioning to value-based care, mostly because of their complex patient populations and lack of EMR technology to capture data and report it for proper reimbursement. As funding is scaled back, this becomes even more challenging.

On top of that, there is already a disparity in the number of physicians working in rural areas.

The Association of American Medical Colleges (AAMC) recently projected the physician shortage to increase to up to 104,900 providers by 2030. The physician shortfall in rural areas represented 65% of the projected shortage.

Implementing IT infrastructure and population health management is important for value-based care reporting and initiatives, but it costs a lot up front to update your EMR and hope that with better quality reporting readmission rates will decrease in the future. There is no easy solution to some of these challenges because this is all new territory for healthcare systems and payers. 

One step to take action is If your health system has not recently completed a coding compliance audit, there could be beneficial education opportunities for your staff that will lead to increased  efficiency within your revenue cycle.

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The Bottom Line

Patients are the fastest growing payers across the country, and this growth trend in patient responsibility has affected rural healthcare providers the most. To prepare your health system to embrace this new healthcare reality everyone must align and think in terms of your patients as individual consumers who are paying for their personal health care.

Trying to collect from patients on now what amounts to 25% of all healthcare revenue presents a growing challenge. Providers are constantly asked to explain the mechanics of their patient’s insurance plans, and with so many different plans, the complexity of deductibles, coinsurance, pre-authorizations, and in-network and out of network roadblocks, it’s increasingly difficult for you to not only keep up, but to collect. It definitely requires a customer-service oriented skill set in your patient pay staff, and more than that, it takes a thoughtful and tactful mindset to engage with patients who are struggling to understand what they owe and why they owe it.


It is okay to admit that the gap between understanding this problem and actually doing something about it, might be too great for you to do on your own.

Healthcare affordability remains the top concern for Americans. Self-pay patients, and those with high-deductible health plans, may truly want to pay their medical bills, but most are unable to afford the entire bill at once. The May 2018 Federal Reserve report, shows that 40% of adults if faced with an unexpected expense of $400 would not be able to pay for it. There have been several instances of people refusing necessary medical care, denying calls to 911, or putting off recommended medical tests because of the cost. Not only is this detrimental to why doctors and hospitals exist, but it also effects your bottom line.

While you may be seeking improved financial performance first and foremost, outsourcing your revenue cycle also solves staffing issues and integrates otherwise out-of-reach technology to automate processes and drive efficiency. Taken collectively, these outcomes are what allow you to scale your business, prevent revenue leakage, attain best practice standards and create consistently positive financial experiences for your patients.


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About Lisa Skriver, Inbound Marketing Lead

Lisa Skriver, Inbound Marketing Lead

Lisa has 8 years of experience working both front and back end revenue cycle. At MediRevv she has served both as a Patient Experience Representative and as a Revenue Cycle Representative, and today, she works as an Inbound Marketing Lead, sharing relevant content through a variety of channels to make connections with prospective clients. She enjoys videography and photography.

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