A recent survey of community hospitals found nearly 70% rate their financial health as “average” or poor.” In this environment, community hospitals must take a fresh look at their approach to patient financial engagement to protect their ability to provide needed care.
Hospital out-of-pocket collections declined sharply this year, down to nearly 48%, a Kodiak Solutions analysis shows. Moreover, more than half of write-offs — 53% — last year involved patients with some form of insurance, including commercial insurance.
Meanwhile, one out of five revenue cycle leaders say they aren’t confident in their hospital’s denials management strategy, a Knowtion Health analysis found. Three out of four healthcare CFOs and revenue cycle leaders believe hitting cash and cash flow targets will be even more important to their organization’s financial health over the next three years.
These are not small challenges for hospitals, and they are especially difficult for community hospitals, where 42% of leaders say they review their financial position daily, according to the community hospital survey. Two out of three say revenue cycle operations and reimbursement are a top concern, while 37% point to cash flow as a top stressor.
For these organizations, strengthening patient financial engagement — starting with payment — could be a financial lifeline.
Why Patient Financial Engagement Is Vital
For years, consumer responsibility for costs of care has been on an upward trend, averaging $1,425 per year after insurance in 2022 before stabilizing. Cost is top of mind for consumers when determining whether to seek needed care, with one out of four adults saying they have skipped or postponed needed care to avoid the expense.
As community hospitals seek ways to protect cash flow and increase revenue from new services, patient financial engagement will play an integral role in ensuring hospitals capture the dollars they are owed. It’s also an important tool for alleviating consumer fears around medical expenses and building trust and loyalty.
Perhaps that’s why 55% of healthcare finance leaders say they will focus on improving the patient payment experience this year, according to an HFMA survey.
Making the Right Moves for Payment
How can community hospitals most effectively engage patients in the financial aspects of their care? Here are key actions leaders should consider.
- Give patients the options they need. Most patients want to pay their healthcare bill, but they are more likely to do so in a timely fashion when they receive their bill in the way they prefer—whether digitally, such as via secure text, or through a paper statement. That’s why it’s important that healthcare providers ask patients how they would like to receive financial communications and incorporate those preferences at each stage of the patient’s financial journey, from out-of-pocket estimates to their explanation of benefits to their balance after insurance. Then, lean into patient preferences in determining the types of payment your organization will accept, from debit or credit card to check to Apple Pay and more.
In our experience, payment capture rates increase by 15% to 43% when text-based payment is introduced, with 43% of patients who log into their account via secure text making a payment.
- Send the right communications at the right time. Use data such as past payment behavior to gauge which patients are most likely to respond to patient financial communications and in what manner (e.g., digitally or via paper payment) and how many communications, on average, it took to secure action. Then, use this information to determine when and how to send patient financial communications. Start with text-based communications, unless the patient has indicated a preference for paper statements. Text can be a vehicle to warm up communications with the patient instead of or before sending a paper statement.
After one week, some organizations choose to send a second text; others may send a text as well as a paper statement. Make sure the secure link takes patients directly to their bill, without the need to log into the patient’s account. The more screens a patient must move past to pay their bill, the less likely the patient will pay their bill electronically.
- Make sure your payment system and your EHR are in sync. This avoids scenarios where the amount paid by insurance or the patient is not reflected in the patient’s bill—a sure source of frustration and a trust-breaker. Here, situations like this can be prevented by working with a best-in-breed technology provider that has experience in successfully integrating billing and payment solutions with the EHR. Also important, from a communications standpoint: Wait until insurance has paid its portion before sending a bill to the patient. This will reduce the potential for patients to ignore communications—and put off payment—until they are sure the information is correct.
One of the lessons hospitals are learning is to go all-in with electronic financial communications. Instead of offering patients the opportunity to opt out of digital communications before a message is sent, try engaging patients digitally unless it’s clear they won’t respond to digital. By exploring digital-first communications and being creative with payment options and interactions, community hospitals can more effectively engage patients at each point in the patient’s financial journey. It’s an approach that equates to increased reach, higher likelihood of payment, and more money, faster, in the hospital’s pocket.
About Pete Heydt
Pete oversees general Operations for PatientPay including Sales, Marketing and Services teams. He’s a veteran leader in the healthcare payment technology market, having served in VP and SVP roles for organizations such as Bottomline Technologies, Patientco, and Payspan. With 23 years in the software industry, he’s passionate about helping healthcare organizations leverage technology and communications to impact better financial outcomes for providers, payers, and patients.