Everyone in healthcare knows that patients own an increasing share of the revenue pie. In many situations, the percentage is over 25%. What is not as commonly understood or appreciated is the operational implication of this shift. Patient revenue takes longer to collect, involves more resources and costs more. Much of patient revenue is collected using outsourced partners of various types such as, early out vendors, eligibility partners, bad debt agencies and others. The scale of third-party services has gotten to the point that vendor fees are often the second largest budget item after internal salary and wages, and as much as 20% of the budget.
Before, when the stakes were low, inefficiencies in managing these external resources didn’t matter. It just wasn’t a big enough issue compared to other opportunities. However, today’s context is different. Managing the external team and balancing cost and value is a big deal.
Since we work with providers around the country optimizing their vendor networks and day-to-day operations and understand the complexity and how arduous it can be to manage these types of agencies, we have some ideas and thoughts for forward-thinking Revenue Cycle executives.
Focus internal resources on your most valuable patient opportunities
The resources in your Business Office are fixed costs and often your most skilled, passionate and engaged team. Make sure they are engaged on your best patient opportunities. Upwards of 30% of your patient population has little or no cash value – these are best handled by contingent, outsourced partners who have great infrastructure and scale to engage these patients in a more cost-effective manner. The core to collection ROI is to separate accounts based on economic value and follow up behavior.
Think creatively about your vendor partners
There are many different types of vendors and they can do some amazing things. If you have a small internal team, perhaps there is one vendor focused on your high-value segments and another for the low-value, high volume group. It’s better to have someone really targeted on great opportunities than to not deal with them proactively. What about predictive coverage discovery? Different from traditional eligibility checks, some vendors can predict that there is primary or secondary insurance in place but simply missing due to some data anomaly or timing issue. Are you maximizing transfer Diagnosis-Related Group (DRG) opportunities?
Have a vendor network strategy
It sometimes makes sense to send out your patient self-pay accounts to a third-party agency on Day 1 versus waiting for the account to default to Bad Debt. Others may feel like they should keep everything for 45 days and then place a segment of their accounts to a third party. Is it an alpha split, a random assignment or a facility-based placement logic? Depending on what we pick, can we compare and contrast performance without angst for the patient mix differences? Do we want to offer a financing option and where in the timeline? A little time thinking about the strategy short- and long-term can really change performance.
Utilize an agency management solution to supplement your Patient Accounting System (PAS)
Managing multiple collection agencies is difficult. Our white paper outlines how we have seen the following issues when trying to manually manage collection agencies:
- It’s nearly impossible to get to a single source of truth: You could have 5 different vendors sending you 5 different reports. How do you compare one vendor to the next to know if they are being effective or not? If you can’t measure things, it is really hard to manage them.
- Reconciliation and data gaps are costing you money: dual placements, reversals and many other account-level issues produce fee issues of 3-7% on average. Without better data integration and account-level build-up, finding the needle in each vendor’s haystack is not possible.
- It’s hard to ensure the patient experience. Policies and standards are set up to give every patient a great and consistent experience. Accounts that get lost in placement, situations where accounts are followed up past closure, or places where special requests are simply not followed up on because of handoffs and approvals, all lead to uneven and frustrating patient experiences. Simple financial transaction files and inventory files won’t solve these routine challenges.
Be creative in how you communicate with different patients
Operators routinely think of patient engagement as letters and dialer programs. A great alternative is blast messaging programs targeted at specific segments of your patient population. Many late payors are not avoiding payment but forgetting payment. A blast message can be a helpful and low-cost reminder. Other patients can be directed to websites and portals where payment can be paid or payment plans established. Enabling patients to “do it themselves” is a great path forward. Let’s use our skilled customer service agents where they can really connect with patients needing that 1:1 engagement.