Thursday, August 13, 2015

Patient-Friendly Loans to Improve Collections

We’ve long advocated that medical practices abandon their traditional “Pay-me-or-else” approaches to debt collection and switch to a “How-can-I-help-you?” posture. Healthcare collections bring special challenges that are not quite like any other billing process. Consider these unique characteristics:
  • Unplanned debt. Even the most conscientious and frugal folks don’t really expect to incur medical debt. Patients feel unlucky and resentful from the outset.
  • Third-party payers. Patients don’t usually understand how insurance works—and new, higher copayment requirements mean uncharted territory for even the savviest patients.
  • Healthcare as a fundamental right. Popular opinion today views healthcare as a right to be provided regardless of ability to pay. Whether you agree or not, the question remains: Who pays for care to the entitled?
  • Physician image. The media have relentlessly recast physicians as a bunch of rich, greedy, heartless vultures preying on humanity’s misery. Even people who don’t buy that characterization can hardly help thinking, “I think they have enough without my money, too.
Factors like these make patient collections an uphill battle from the outset. And practices that have tried to become more “business-like” in their billing and collections have often seen their slightly improved collections come at the cost of their public professional image. At a time when the predominantly third-party-payer system necessitates increased patient volume—resulting in reduced time with each patient—a hard-nosed collection policy drives a wedge ever deeper between the doctor and his or her patients.

Hospitals have traditionally suffered worse collection ratios than physicians—for many reasons. An impersonal approach to billing and collecting (sometimes outsourced) has hurt more than it has helped. Those institutions exploring “interest-free” financing are starting to report some real successes.

In a sense, hospitals have found a way to do what many practices used to do before profit margin tolerances became critically thin. Most medical practices used to let patients pay whatever they could, without interest or penalty. Hospitals never could afford to do that because people on such an “honor system” have a hard time paying a faceless institution. Paying your doctor—especially one you continue to see on occasion—carries a different dynamic.

Larger practices may be able to arrange with a local bank for an interest-free loan program for their patients. (As a matter of fact, the first time we heard of this, we were working with a very creative administrator at a 35-doctor multi-specialty practice back in 1988! He made a deal with a local bank for affordable interest and limited recourse.)

Get your accountant to help you crunch the numbers and project costs and benefits for offering interest-free financing for patients with large balances. (Remember, though, it’s not interest free for you!)

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