The rising cost of out-of-pocket healthcare expenses leaves many patients in the position of watching their personal debt levels rise. Patients are often unable to pay upfront for services. Offering payment arrangements can help patients get needed care and give your organization a steady revenue stream, however, only when handled properly. In practice, most healthcare organizations fail to get this part of the billing equation right, leading to poor patient satisfaction, serious cash flow issues, and an increase of bad debt on the books.
While many healthcare providers fail to efficiently set up patient payment arrangements, the need for these services is on the rise. In 2017, 43% of insured patients reported difficulty paying their deductibles. Even the cost of copays and prescription drugs can be a financial drain. High deductible plans are becoming more popular, leaving patients with the balance due.
Poor Payment Arrangements Leave Medical Bills for Last
Patients already have a tendency to delay payments for medical services. After all, they have to pay their rent/mortgage and they need to keep the electric on too. Once those bills are paid, they still have to eat. Depending on a patient's financial situation, that may not leave a lot left to service medical debt.
A recent survey by the Federal Reserve Board found that 44 percent of American adults couldn't come up with $400 in unexpected spending without turning to family, friends, or pawn shops. With that in mind, it’s important to start the conversation about payment arrangements early using the right questions.
Extended Payment Terms Aren't the Answer
It’s not an uncommon practice for providers to extend interest-free payment options for multiple years in the future. While this might seem like a steady stream of payments, it can also lead to more defaults, complaints, and administrative costs, in addition to more unexpected debt for the patient. An expired credit card can cause a missed payment, which means additional reminder notices and telephone calls. Not only does this increase your cost of collecting on the unpaid debt, it also opens the door to more complaints from patients.
When you begin the conversation about payment arrangements by asking, “Can you make payments?”, that bill is going straight to the bottom of your patient’s pile of bills to be paid. If a patient owes $500 and they’re asked about making monthly payments, a common response is in the $50 range. But why so low? When your patient gets to choose the number, they are setting the expectation, which means they’re going to pay the bare minimum, especially if it is interest-free. If you start the conversation with every patient this way, even patients that can pay more will tend to go low. When you have multiple representatives using this phrase, multiple times per day, you’re setting your organization up for inconsistency and future cash flow problems. Successful payment plans need to be fair for all parties involved.
Changing the Conversation about Medical Debt
Instead, you should always clearly set the expectation and guide the conversation. So why not ask for the balance in full and only when it is clear that the patient cannot pay the debt, transition the conversation with a new question: "How much are you short?"
When you ask how much a patient is short, 9 out of 10 times, you'll receive a more realistic upfront payment than if you were to ask if they can make payments. On that $500 balance, you might get the response, "Well, I can pay $250 now and the rest next month," a 500% increase to cash flow from the previous line of questioning. If you ask that question and the amount they are able to pay is still low, due to financial hardship, you can still maintain clear expectations and when making an exception. At this point you can offer a longer term or refer to your financial assistance program, if you have one.
This one simple phrase changes the entire conversation and by doing so, you can collect higher upfront payments and easily separate out those who need the help, versus those that are just looking for long term interest-free financing. Framing the question in this manner tells patients that you expect to be paid, but you are also empathetic to their financial situation. This demonstrates your willingness to work with them and they’ll be more likely respond appropriately in turn.
Although transitioning your team to this style of questioning may be new to them at first, it will ultimately allow your organization to find the right balance between customer service and cash flow. This ensures that you can afford to keep doing what you do best for years to come - Caring for your patients.
Tavelli Co., Inc. has over 37 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.
IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.