What you expect from bad debt.
Earlier this month, we polled 206 revenue cycle leaders with the question, “What would you change about bad debt?” Distributed by social media and emailed direct to our clients and peers, the poll prompted responses that indicate a change is needed in traditional bad debt practices. Three primary findings are outlined below.
- 60% want less costs, lower contingency fees
- 20% want less aggression and more empathy
- 90% want less mis-categorized bad debt / greater financial assistance before write-off
60% of respondents said they’d like to see lower costs and contingency fees in bad debt. That’s not too surprising considering the dramatic spike in cost to collect that occurs when accounts are sent out to collections and moved off the active AR. Bad debt agency costs are typically 5-10 times higher than a hospital’s internal cost to collet. Many revenue cycle leaders have a sharp interest to cut expenses spurred on by the narrow margins and reduced revenues since the onset of the covid-19 pandemic.
A desire for bad debt to be less aggressive and demonstrate more empathy to patients was shared by 20% of our participants. Throughout the past 18 months, hospitals and the communities they serve have heightened their awareness of the entire healthcare experience. How might a contentious collection process affect patient satisfaction scores, consumer choice/loyalty, and the public’s perception of their local hospital and providers? Already a key initiative for the entire industry, the patient experience remains a top priority from access to bedside to the financial transactions that accompany care. Furthermore, lockdowns and business closures have led to a higher percentage of patients unable to afford their care.
Accurate financial clearance, specifically the need to keep financial assistance/charity care cases from going to collections, received substantial attention in the poll. Within an emailed version of our question, over 90% of respondents said that it would be a change they would make. Considering the data compiled by Kaiser Health News and sourced from IRS reporting, nonprofit hospital organizations alone estimate that they may annually write off “$2.7 billion in bills sent to patients who probably would have qualified for financial assistance under the hospitals’ own policies…” The mis-categorization of patients and their bills is acutely discussed in the KHN article, “Patients Eligible For Charity Care Instead Get Big Bills” (//khn.org/news/patients-eligible-for-charity-care-instead-get-big-bills/).
Among the responses and in our discussions with clients, several prominent phrases and expectations are evident:
a less contentious experience.
more happy patients, more loyal patients,
Less bad. More good. Is it a paradox for bad debt?
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What would you change about bad debt?