Patient Engagement of the Financial Kind

As patients adapt to their heightened financial responsibilities, health systems and hospitals must help make sure patients pay for as much of their bills as possible.

This article first appeared in the March 2016 issue of HealthLeaders magazine.

With more healthcare costs shifting to patients through high-deductible health plans and other trends, health systems and hospitals are facing the need to develop a new skill: asking patients for more money. To rise to this challenge, revenue cycle innovators are engaging patients as financial partners from hospital registration to bill collection, and every point in between.

"In today's healthcare environment, everybody owes something for their healthcare, and this is a cultural shift," says Jane Berkebile, system vice president of revenue cycle for OhioHealth in Columbus. In the fiscal year ending June 2013, OhioHealth posted total revenue at $2.1 billion, with net income pegged at $348.7 million.

This cultural shift includes a patient learning curve laden with risk for healthcare providers, she says. "Very few people budget for healthcare expenses. It usually comes as a surprise for them. … If someone has a health incident and they have a $10,000 deductible, that's a big shock to them."

As patients adapt to their heightened financial responsibilities, health systems and hospitals must reach out early and often to help make sure patients pay for as much of their bills as possible, Berkebile says. "We're more likely to get paid if there is at least an expectation that there is an out-of-pocket expense and we expect the patient to pay it."

While rising to this bill-collection challenge, healthcare providers must avoid pressing their patients too hard, she says. "We walk a very fine line. … We don't want to be seen as having heavy-handed tactics. It's more a conversation."

Point-of-service collections
A robust effort to engage patients as financial partners can generate impressive revenue cycle results, including higher point-of-service collections, lower bad debt, and less spending on financial assistance, Berkebile says.

OhioHealth posted $22 million in POS cash collections at the health system's four central Ohio hospitals in 2015, she says. "We stress the need for communication with patients. We set targets. We track the dollars we collect."

POS cash collections have increased every year at OhioHealth since 2009, when the figure was $9 million, according to health system records.

Berkebile says POS cash collection is a key focus for the training and education unit within OhioHealth's revenue cycle team. The training and education unit has about nine full-time staffers, and it provides instruction to revenue cycle team members and many employees outside the department who work with patients. "It is critical that all of our physician practices know the policies for registration, point-of-service collection, and messaging to the patient. The last thing you want someone to do is say, 'Don't worry about paying for that.' "

Financial partnering with patients helps minimize bill-collection bad debt at OhioHealth, which tracks bad debt on a monthly basis. Bad debt accounts for less than 2% of gross patient revenue "across the whole organization," she says.

"Bad debt as a percentage of gross patient revenue is considered excellent if at or below 2% of gross patient revenue. Starting at a target of 2% of GPR, we have continued to whittle that down as we have made progress. As we bring on new facilities, our initial target is always 2% GPR."

Assessing the propensity of patients to pay also helps to contain the budget line for financial assistance at OhioHealth, Berkebile says, noting many low-income patients benefit from the financial counseling services offered at the health system, such as Medicaid enrollment facilitation.

In Ohio, the expansion of Medicaid under the Patient Protection and Affordable Care Act has been a boost for OhioHealth and the health system's low-income patients. "That's a benefit to the patient," she says of the access to medical services that comes with Medicaid enrollment, adding that the health system's "charity care has been cut roughly in half" since Ohio expanded Medicaid to provide coverage to more low-income adults in January 2014.

A positive financial experience
As patients become increasingly important economic players in healthcare, providers who fail to focus on the financial interactions with their patients do so at increasing risk, says Corey Meyer, director of patient access and virtual health at Lancaster General Health in Pennsylvania. "In any other industry, a bad experience with the financial transaction will send the consumer looking for an alternative. Why would healthcare be any different?"

Lancaster General Health has a total of 689 staffed beds between its acute care hospital, its rehabilitation hospital, and Women & Babies Hospital. In 2013, the health system posted total revenue at $827.1 million, with net income pegged at $92.5 million.

An August 2014 survey of 500 healthcare patients shows a clear link between billing experience and financial consequences, Meyer says. The survey, which was conducted by Connance, a Waltham, Massachusetts–based vendor of predictive analytic technology solutions, found that 74% of patients who gave their billing experience a top score paid their bills in full, compared to a 33% payment rate for patients who were less than satisfied with their billing experience.

A positive billing experience also has a major impact on patient loyalty, the Connance survey found. For patients who gave their billing experience a top score, 95% reported they would return to the same hospital for another elective medical procedure. For patients who were less than satisfied with their billing experience, only 58% said they would return to the same hospital for another elective procedure.

"Patients have choice in where to get care, as well as a choice about whether to get care at all. If a patient has a great clinical experience but their financial experience is not great, data suggests the patient will be very unlikely to recommend the hospital to a friend, or pay their bill in full," Meyer says. "We are focusing on the entire financial experience from price estimation, to properly capturing insurance information, providing easy-to-understand bills, and offering multiple payment options including online payment and self-service payment plans."

There is a heavy price to be paid when financial relationships between healthcare providers and patients go sour, according to Mayo Clinic billing experience data presented in June 2015 at the annual conference of the Healthcare Finance Management Association in Orlando, Florida.

Yvonne Chase, manager for patient access and business services at Mayo Clinic Arizona and Florida, shared data from a 2011 study that found 93% of patients who are satisfied with their billing experience are also satisfied with their clinical experience. When the billing experience is negative, only 63% of patients are satisfied with their clinical experience.

With major campuses in Minnesota, Arizona, and Florida, Mayo Clinic served 1.3 million patients in 2014, including 128,000 hospital admissions. In 2014, Mayo Clinic posted total revenue at $9.8 billion, with net operating income pegged at $834 million.

Strategies for partnering
Devoting time and resources to cultivating customer service capabilities is one of the primary keys to success in engaging patients as financial partners, Meyer says.

"There are many investments to consider, but first and foremost would be our people and the patient experience. We need to have great people who can properly engage patients when they call or interact with us in person. The financial experience goes best when we collect proper insurance information from the patient and are able to provide financial information in plain language early in the process.

"We get great feedback from patients who receive calls from our financial estimators prior to a scheduled service explaining their benefits and out-of-pocket expenses. Many of those patients choose to provide a down payment for their scheduled service because we have built the trust," Meyer says.

In addition to traditional channels such as registration and collections, the OhioHealth revenue cycle team has multiple customer service touch points to connect with patients at every step in the billing process, including a Monday-through-Saturday call center and financial advisors at every hospital in the health system, Berkebile says.

The OhioHealth customer service call center serves a hotline function for anxious patients who are seeking financial information about an upcoming medical procedure, she says, noting electronic communication with commercial payers is essential to access deductible and coinsurance information. "Patients can contact us ahead of time, and we can give them an estimate of charges and coverage."

Eligibility-verification and cost-estimation tools are key building blocks for engaging patients as financial partners, Chase says. "This way we can verify the specifics not covered by insurance and the patient's out-of-pocket expenses based on what is ordered by the physician."

OhioHealth employs dozens of financial advocates, with at least two at the health system's smallest hospitals and as many as 10 at the largest hospitals, Berkebile says. "We can really sit down with patients and help them understand the responsibility."

For nonelective inpatient cases, the financial advocates meet with patients as soon as possible following estimation of payer coverage and out-of-pocket costs, she says, noting clinicians are consulted to make sure patients are fit to hold a conversation. "We begin that dialogue, and we are standardized in our scripting and messaging. We ask for the copay and deductible until it gets paid."

Overcoming challenges to financial partnering The first hurdle that confronts many revenue cycle teams as they seek to build financial partnerships with patients is internal resistance, Chase says, noting nervousness about the potential for a negative reaction to a more active effort to collect patient bills. In practice, concerns over offending patients and driving them to competitors are found to be unwarranted, she says. "We find patients who we are transparent with regarding costs have a much more positive patient experience."

To help make elevated patient financial responsibility financially sustainable for healthcare providers, revenue cycle teams need to establish streamlined processes for patients to follow, Meyer says. "We need make the financial experience simpler and less overwhelming for patients. Reducing surprises by explaining insurance benefits and options up front can reduce the sticker shock and can help engage patients in their care." Mindset is a mammoth hurdle to clear as healthcare providers conduct financial conversations with patients, he says. "Healthcare is something that no one really wants to buy. If I need a new couch or a new car, there is excitement in the purchase. Additionally, I will do some research on the item and the costs. With healthcare, it is not something that people want to spend money on or wade through cost information." Building an expectation of patient financial responsibility can be delicate, but it is not an entirely foreign concept, Berkebile says. "It's getting patients to understand that healthcare costs money. When I take my cats to the vet, I have my checkbook out."

To effectively engage patients as financial partners, revenue cycle teams must balance bill collection with compassion, she says. "The main challenge is the patient's stress or anxiety related to the case. We're saving lives. We're working with people. We're not going to turn people away for medically necessary care."