The Pitfalls of Ignoring Self Pay
Back in 2010, patient self pay contributed just 10.9% to annual patient services revenue, on average. Remember those days? Common practice was to send statements and wait for the phone to ring, and follow-up efforts were few and far between.
Fast forward to 2016. Self pay now contributes up to 20-30% of annual patient services revenue, which is why a more patient-focused strategy is needed to meet this growing category of A/R.
The Rise of Self Pay Importance
Our industry is making constant changes and improvements to meet rising trends and new regulations as well as evolving consumer behaviors and needs—and patient self pay is no exception. Patients are increasingly responsible for a higher percentage of their own healthcare costs (sometimes the entire cost). Today, over 33 million people are uninsured. The uninsured rate—which has nearly doubled over the past decade—along with high deductible health plans, accountable care, and so many other factors have contributed to changes in the whole financial landscape of self pay collections.
With so many patients responsible for so much of their own healthcare costs, healthcare provider organizations need a clear strategy for collecting patient balances during and soon after care has been provided. Why? For every 30 days an account remains in accounts receivable, the odds of collecting decrease by 30 percent.
Unfortunately, many provider organizations haven’t yet leveraged new technologies and are “stuck” with traditional, outdated strategies, or with systems and workflows that are simply not optimized for patient self pay collection. As a result, they’re not able to respond well to the growth of self pay.
Point blank, when you ignore self pay A/R today, you are likely to encounter these pitfalls down the road.
You Lose Revenue
Revenue leakage due to a lack of revenue capture means that you’ve left money that is rightfully yours on the table. This lost revenue may make meeting operating expenses more difficult and will negatively impact profitability. Further, aged self pay balances inevitably contribute to bad debt. Every healthcare provider has a significant amount of bad debt resulting from unpaid patient balances. While most facilities are beginning to manage accumulated debt better and more efficiently, preventing patient pay balances from ending up as bad debt in the first place is arguably a better strategy.
You Hurt the Patient’s Experience
Neglecting to concentrate on collecting self pay balances actually alienates a growing portion of your patient population. The profile of patients paying out-of-pocket has definitely evolved. While it typically includes the uninsured and underinsured, today it also encompasses any insured patient with a deductible—especially the growing number of patients enrolled in high deductible health plans. Unemployed, self-employed, employed with or without insurance—these types of patients are all making decisions about how they will access and pay for their healthcare, and often that decision is choosing paying out of pocket. For healthcare providers, the rise in self pay makes good and positive communication between client and provider more imperative than ever before.
Patient care doesn’t end at the exit door—the patient’s financial experience with a provider is as crucial as the care experience in terms of building patient satisfaction and loyalty.
Today’s provider organizations need to create experiences that give the patient a reason to return. Part of the equation for success is providing a financial experience for each patient that is easy and friendly. In fact, not taking the time to make a patient feel comfortable in a financial conversation, not adequately explaining the patient’s financial responsibility and not showing patients that they are respected and valued will quickly drive a wedge in the provider-patient relationship, ultimately hurting the success of self pay payment. Patients desire answers to their questions, and they want to understand exactly what they're paying for. They want easy payment solutions and, often, a set payment schedule. They desire a payment system that utilizes technology and accepts various types of payment.
When a provider doesn't provide this, the patient may take their business elsewhere, even if the care experience was excellent.
This is especially the case if the patient is paying out-of-pocket. As with any consumer making any high-dollar purchase, who wants to pay for a service they're not completely satisfied with? The patients who find financial options that meet their specific needs and who are treated respectfully throughout the care and billing experience are more likely to return, rate the facility favorably and recommend it to others.
The Bottom Line
Self pay is on the rise. Providers who embrace a strategy that leads to a positive patient financial experience are better prepared to achieve their financial objectives and gain the benefits of a repeat patient.
If you’re interested in learning how to improve your self pay collection strategy, download our ebook, A Winning Self Pay Strategy.