< + > Community Hospitals Are Severely Challenged Financially, It’s Time for a Payment Rx

The following is a guest article by Tom Furr, CEO at PatientPay

Forty percent of U.S. hospitals are losing money, a Kaufman Hall analysis shows, even at a time when overall hospital margins are growing. Among them, community and rural hospitals are taking the worst hit. This begs the question: What more should community hospitals be doing to protect their financial health?

It’s an important topic given that a hospital’s financial health ultimately sustains its ability to deliver services to the communities it serves. As community hospital leaders explore opportunities to protect cash flow, innovations in patient payment collection—including digital tools—deserve attention in particular based on the continued challenges with the USPS either not delivering or taking a long time to deliver letters.

The Business Case for Payment Innovation

At first glance, the numbers from the Kaufman Hall analysis appear encouraging: Overall, hospitals’ financial performance improved from March to April, with outpatient revenue, operating room minutes, and emergency department visits increasing. But a closer look at the numbers shows the gap between high performers and low performers is widening. Low performers must reverse this trend if they are to reinvest in their ability to provide community care, leaders note.

These insights are backed by other recent trends that point to a need to turn up the focus on payment:

• Hospital revenue cycle departments faced a sharp decline in out-of-pocket collections this year as the patient collection rate fell to nearly 48%, a Kodiak Solutions analysis shows 
• Over half (53%) of the write-offs last year came from patients with some form of insurance, including commercial insurance
• Even community hospitals with a reputation for excellent care quality are struggling to capture enough revenue from reimbursement and out-of-pocket collections to stay afloat

Perhaps it’s no surprise, then, that nearly 70% of community hospital leaders rate their financial health as “average” or “poor.”

These are signs that the current financial models and processes aren’t working anymore for community hospitals. At a time when every dollar counts, community hospital leaders must double down on closing gaps in payment. 

Digital payment innovation offers an effective way to strengthen patient collection rates by eliminating one of the biggest barriers to payment: payment confusion. Text-based payment, for example, provides a seamless avenue for alerting patients when their out-of-pocket balance is ready. It connects patients with the resources they need to understand what is owed and why in the moment, such as their explanation of benefits. It also empowers patients to take action using the device they rely on most: their mobile phone.

Text-to-payment technologies drive faster self-pay payments. In our experience, payment capture rates increase 15% to 43% when text-based payment is introduced, with 43% of patients who log into their bill making a payment. Payment is received within 14 days, on average, with some payments received within seconds of delivering a secure text. 

However, success in digital payment innovation involves more than simply sending payment notifications via text with a link for payment. It also necessitates a thoughtful—and consumer science-based, data-driven approach to patient financial communications, with careful attention to timing, messaging, and ease of use.

Developing a Patient-Centric Approach

At a time when every dollar counts, community hospital leaders must double down on closing gaps in payment—but they also must protect the patient’s financial experience. Here are four considerations in designing a digital payment approach that speeds up self-pay collections while leaving patients feeling empowered and more informed.

Engage Your Revenue Cycle Team in Determining which Solution to Invest In

One out of three revenue cycle leaders struggle with having the right skillsets in place to improve cash flow, a Knowtion Health survey found. This makes it doubly important that a digital payment solution is as easy for staff to explain and navigate as it is for consumers to use. By involving staff in the digital payment selection process, staff are more likely to become ambassadors for this approach, strengthening use rates.

Go Beyond Your EHR

While an EHR might offer traditional methods for digital communications with a “portal,” community hospitals need more than a standard, “good enough” approach. They need a solution that is grounded in data science which guarantees an increase in collections. Look for a best-of-breed solution that leverages predictive analytics to guide decisions such as when to send electronic payment messages, down to the time of day when consumers are most likely to engage. The impact on revenue will be far greater for community hospitals rather than the revenue made by an EHR with their “We can do it all!” approach because it is designed specifically with consumer payment behavior and best practices in digital payment in mind.

Lean into a Data-Based Approach to Digital Payment Delivery

For instance, what is the patient’s past history of medical payment—and how quickly do they tend to pay? Which patients still prefer paper statements over web-based communications, and which ones are open to an electronic approach? Data points such as these will help shape decisions around whether to incur the expense of sending a text-to-pay message and to whom.

Give Digital Communications Time to Breathe

This is an important step for reducing the risk of digital fatigue. Some providers wait seven days after the first message is delivered to send an electronic reminder. Others might send a paper statement at that point to get a feel for patient preferences, or they may choose to send one more text and wait seven days to take a paper-based approach. Listen to feedback from community members in the first months after making the switch to a text-to-pay solution. Then, adjust the approach based on community-specific feedback.

By taking an all-angles approach to digital payment innovation, community hospitals can boost engagement and cash flow while protecting consumer trust and the patient financial experience.