Skyrocket your Practice Revenue: We Answer Your Most-Asked Questions About Patient Collections
Patients are being forced to shoulder ever-greater portions of healthcare bills. Unfortunately, patients are notoriously difficult payers. Learn how technology can change the game—and make sure you bring in every possible penny you’ve earned. Kevin Clinton, Kareo’s Director of Payments Marketing, explains how.
Q: Why is it so hard to get patients to pay?
A: Well, let’s not be too hasty to blame patients. It’s no secret that healthcare costs continue to skyrocket way faster than the rest of the economy. About 54% of Americans get their medical insurance through their employers, who are foisting more and more of those costs onto workers. Premiums, deductibles, and copays continue to rise—far outpacing wage increases.
Nearly 24 million people who receive their coverage from employers have premiums or out-of-pocket costs considered to be high compared to their income. And more than 60% of Americans with insurance use up most or all of their savings on medical bills.
This explains why medical bills are the number one cause of bankruptcies in the nation. In fact, about 16 million people in the United States have more than $1,000 in medical debts. A whopping 3 million owe more than $10,000. And according to a KFF Health Tracking Poll, 46% of insured adults report difficulty affording out-of-pocket costs.
But tight budgets aren’t the only reason patients don’t pay. Many people simply don’t open snail mail anymore and don’t read their invoices. Others move frequently and don’t update their address. Younger people don’t use checkbooks or keep stamps and envelopes handy. In other words, paying bills is not only economically stressful, but it can also be inconvenient.
Q: Are patients’ attitudes changing too?
A: Absolutely. We’re seeing a big shift from the days when people accepted whatever services their providers offered and stayed loyal to their doctors and dentists for decades.
Today healthcare is a consumer-oriented marketplace where patients realize that they have choices. Providers are discovering that they have to pay attention to the quality of patients’ experience as well as their medical outcomes.
Two-thirds of patients surveyed said that they would consider switching providers to improve their experience. A generation ago, this would have been unheard of.
Q: Is social media having an impact?
A: Social media is actually causing a lot of the change. Studies show that 71% of patients now go online to read reviews as their first step in selecting a provider.
If a physician has poor ratings or an amateurish website, they’ll have a hard time competing with the practices who put a lot of effort into their social platforms. And if patients complain online about your fees and billing system, you could be in big trouble.
Q: How is the digital revolution affecting medical billing?
A: We’ve already seen insurance billing become totally online. The most recent change is in patient collections, which is a rapidly growing portion of a practice’s revenue. The vast majority of practices still send out paper statements, either by their in-house staff or through a billing service. But as noted above, paper mail is much less effective than it used to be, and statements are often ignored.
Q: Can practices jump on the digital bandwagon too?
A: That’s the whole idea. First, they can listen to what patients say they want—showing that they align with the new customer-centric culture. A recent survey found that patients would use more digital or mobile wallets to pay their providers if these options were available. In practical terms, this means making it easy for patients to use credit cards and do so on their phone or by computer, instead of asking them to pull out the plastic.
There are many ways you can do this. For mobile payments, you can offer solutions like ApplePay or GooglePay so a person can just click on a text to pay. You can also keep a patient’s credit card on file—with appropriate security, of course. You can activate payment options within your patient portal software, or include QR code codes on invoices. You can also provide a payment terminal within your office.
Q: If snail mail doesn’t work, what alternatives do practices have?
A: Again, the answer lies in going digital. Send out patient statements by email or text. Wait, you might be asking—isn’t sending a bill via text kind of tacky? Actually, no.
People are becoming so accustomed to texting these days that they actually prefer it to paper. Kareo’s customers are telling us that texts work much better than even emails, since the average person is deluged by emails. Some of our clients say that up to 75% of patients pay right away when they get text balance reminders. That’s because it’s so easy. They just click on the link, pay and can forget about it.
Q: Isn’t it hard to set up text invoicing?
A: Believe it or not, it can all be done automatically. With a solution that links to your practice management software, you can set up either text or email invoicing however you like. Many practices have their software send out text payment reminders as soon as insurance reimbursement comes in.
Let’s say that previously you were only sending patients paper statements once a month. By using automated patient billing, you’re cutting weeks off your revenue cycle, especially for patients who used to wait for the second—or third, or fourth—invoice before they paid.
Automated billing can follow up with reminder texts as often as you want, and then also send paper statements if digital communications aren’t getting a response.
For instance, Kareo’s Automated Patient Billing solution sends the patient a statement via text and email on day one after insurance pays. On day three, a text reminder goes out. On day five, the patient is sent a paper statement. Reminders stop as soon as payment is received. It all works like clockwork, without any input from the billing staff.
Alternatively, some practices choose to manage digital communications themselves. You always have the choice of excluding particular individuals or groups of patients who have special considerations or who prefer to get everything through the mail.
Q: Do patients find text invoices confusing?
A: On the contrary. Because invoices are generated directly from your billing and practice management software, they are designed to be clear and concise. And since they arrive very quickly after service has been provided, patients find it easier to remember what the bill was for.
Q: Does all this apply only to direct practices? What can billing companies do?
A: Billing companies have been some of the most enthusiastic adopters of automated billing for patient collections. Brittany Lawler of ABS Business Solutions, reported that in her first 30 days of using Kareo Automated Patient Billing, her company collected a staggering $100,000 from just 37 accounts. She says that only 35% of patients act on a paper invoice, compared to almost three-quarters who pay in response to texts.
Here’s another plus. Because automated patient billing is set-it-and-forget-it technology, it frees up staff time and relieves billers from making stressful collection calls—resulting in happier employees.
Q: So, what’s the bottom line?
A: Let’s do the math. Only 70% of your revenue typically comes from insurers. That leaves a large portion coming from patients. And research shows that the longer balances go unpaid, the less likely they are to be collected. Consider how long it takes people to pay paper bills that come once a month. You’re looking at least a few months delay after the service date.
Now add in how much bad debt you typically write off. Many billing managers say they don’t even bother to chase patient balances. It just isn’t worth the effort. But those balances add up. You also don’t want the hassle of bringing in collection agencies.
If you can find a way to encourage more patients to pay their share faster, and in full, you stand to bring in up to 25% more revenue. Think what that would do to your cash flow.
The good news is that the technology for making this happens exists today, and it is surprisingly cost-effective. To learn more about Kareo Patient Collect and its Automated Patient Billing solution, click here. Watch Kareo’s free webinar on Patient Collections.