Payment Strategies for Practice Growth
FINANCE
Chip Hunziker
You want your practice to grow and thrive in the years to come. To achieve this outcome, you need to seek solutions and technology that enable you to cultivate a “retail” approach to the business of health care. Why a retail approach? Let’s look at the numbers. The retail industry experiences approximately 3 to 5% bad debt while the healthcare industry is upward of 30%. Enough said. This commentary will address patient-centric payment strategies, systems, and policies that you should adopt to ensure that you are paid for the services you deliver.
Price Transparency
How many of us go to the store, fill up a shopping cart, and never look at the prices? Not many! So the first thing we need to do as healthcare providers is give our patients a written e-statement of what their treatment plan will cost. Whether you accept insurance or are a cash-based practice, today’s patients want to know, “How much is this going to cost me?” When surveyed, a high percentage of patients said they were confused about what they owed, which was why they had not paid their provider.
Providing a detailed treatment plan and written cost estimate up front will enable your patients to fully understand the extent of their expected treatment as well as their financial obligation. Furthermore, it will lead to the natural question and empower your staff to ask, “How do you intend to pay?” For patients with insurance, you should check their eligibility and benefits and provide this information in writing to your patients. Ensure that they acknowledge that the information is a “good faith estimate and subject to change.” Otherwise, providing services without setting cost expectations is a formula for disaster.
Once you provide your patients with a written estimate of your treatment plan, you must have meaningful and flexible patient payment solutions that can be tailored to fit the individual needs of your patients. In addition, once you have explained the costs to your patients, you must have patientcentric solutions in place that will ensure the patient receives the necessary care and treatment, and that enables you to be paid. Here are some ideas, policies, and technology options you should consider in your practice.
Payment Account On File
The thought of going to a retail establishment or restaurant and leaving without paying is laughable (and in most cases criminal). However, for those healthcare providers who accept insurance, that’s largely how business is conducted since only 42% of the expected patient revenue is collected at the time of service. Once again, in order to grow and thrive, this has to change. If you accept insurance and “balance bill,” you’re allowing your patients to receive your services now and pay you later.
Accordingly, you should adopt a system that enables you to store a patient’s payment account for future use—in a PCIand HIPAA-compliant manner, of course. Your system should generate an agreement for the patient to sign, effectively authorizing you to charge him or her for amounts not covered by insurance. This way, after the claim is adjudicated and the patient’s balance is confirmed, you can run the patient’s payment. Consider a system that can send the patient a text or e-mail notifying him or her of the pending payment, which will greatly increase the patient’s adoption and satisfaction, plus provide an opportunity to ask questions.
Ensure your agreement meets the credit card association’s standards and has, minimally, the following characteristics: it must be signed, have a time limit, have a maximum dollar amount, and must be cancelable by the patient.
Patient Payment Plans
When asked, a solid 37% of patients cite the lack of financing options as the reason they don’t get the care they need. In chiropractic, the problem is even more pronounced with 51% of patients forgoing or abbreviating their care due to finances. The number one thing you can do to increase treatment compliance, practice revenue, and enhance patient outcomes is to offer patient payment plans. Also, if you’re going to set up in-house payment plans, you have to accept two realities: (1) you will have some bad debt, and (2) you will have to wait for your money and incur the costs of collecting these payments.
Whether your staff administers your in-house program or you contract with a billing services company to administer the program, you need to have a fully executed and legally binding agreement with each patient. Additionally, you must embrace technology to automate the process. You should store the patient’s payment account—again, in a PCI-compliant manner—as well as automate the payment schedules.
Many systems will enable you to store two different payment accounts. So, should the patient’s preferred payment method decline, the system will automatically debit the patient’s secondary account. You will also need to develop policies that address refunds and cancellations, requirements for down payments, and payment term duration. At a minimum, you should require down payments that cover your hard or up-front costs, and you should keep your term durations as short a period as possible.
Patient Financing
There are two major advantages of third-party financing over in-house payment plans: (1) enhanced cash flow, and (2) a reduction of bad debt since the lender assumes most of the risk related to a patient’s nonpayment. With third-party lending, you are paid up front what typically might take you 10 to 12 months to collect. Time is money, so why wait?
When evaluating a third-party lender, consider the following:
1. What are their acceptance criteria? Most third-party finance companies require a credit check, and in today’s economy, many patients won’t qualify or they’re reluctant to have their credit checked. Look for a partner that can serve all of your patients.
2. Is the lender patient-friendly (and practice-friendly)? You need to be confident that the lender’s commitment to customer service and patient satisfaction minors what you practice in your office.
3. What is in the fine print? Be wary of companies that have hidden fees or charge punitive interest should your patient have an issue. Choose a vendor that you would be willing to use if you or a family member needed financing.
Online Bill Pay and Electronic Statement Presentment
We’ve all heard it, and some of us have even said it, “The check is in the mail.” Well, not anymore. These days, patients want convenience and demand the safety of online bill pay and e-statement presentment. No one should be asked to write their credit card information on a statement and return it via the postal service to their healthcare provider. It’s neither safe nor efficient. Online bill pay and electronic statement presentment will not only increase patient satisfaction, but it also will get you paid up to 19 days sooner. Not to mention, you will gain an estimated $1.53 per statement based on savings in postage, paper supplies, and staff time.
In summary, and regardless of whether or not you accept insurance, the reality is that you’re running a “cash-based business.” Today, patients treat the purchase of healthcare services much the same way they do when buying and paying for many retail products. This requires providers to adopt a “retail approach” to health care and, therefore, provide patients with upfront pricing transparency and as many convenient and secure payment options as possible.
Chip Hunziker is the founder and CEO ofClearGage, Inc., a leading provider ofpatient payment and financial solutions to the healthcare market. Chip has more  I than 25 years of experience in the healthcare, financial ^^k & H services, and employee benefits industries. He can be contacted at 888-22 7-5932 or info(a>cleargage. com, or through www. cleargage. com.
