The recent global pandemic of COVID-19 has caused an unprecedented shift in direction for the healthcare industry’s cost management goals. Because of this, streamlining your practice’s revenue cycle is more important than ever. This can be increasingly challenging as high deductible health plans are more of the norm. So how can your practice continue to spend more time caring for your patients and far less time collecting patient owed balances, all while maintaining a healthy revenue cycle?
With various forms of financial assistance commonly offered to patients, we must identify how each could be impacting your AR. In some cases, they could be doing more harm than good for your bottom line.
A traditional way that practices “finance” payments with their patients is by setting up payment plans so that the total sum can be paid-off over a longer period of time and is mostly used for higher balances. This is defined as a passive approach to collection because the responsibility is on the patient to follow the plan and pay on time. But what happens when the patient doesn’t follow the plan and defaults on payments? The financial burden falls on you. The time and resources to collect fall on you too. That’s three strikes against your cost reduction goals.
Following up on unpaid payment plans takes time and effort by your staff that could be reallocated to assisting patients and increasing patient satisfaction. We’ve found that between 40-50% of payment plans can end up in default, and 83% of small physician practices said that collecting payment on these long-term payment plans is the most challenging to actually get paid in full.
In order to maximize collections and minimize risks, we have to think outside the box. While payment plans can be effective in some cases, considering additional methods of financing payments with your patients can be beneficial to both parties.
The Power of a Third Party
One approach that, compared to standard payment plans, removes risk and increases overall revenue is adding non-recourse financing earlier in the payment discussion. Instead of taking on the patient debt and potential default, a third party offers a non-recourse loan to the patient, and once approved, the financial responsibility shifts away from your practice and on to the third-party. Thus, your practice gets paid in full and is no longer responsible for the time and money associated with following up on unpaid payment plans or ever sending accounts to collections.
Ultimately, this approach can be more beneficial to healthcare providers than payment plans because it mitigates most risks that you’d commonly take on. And the best part is, you still get paid at the end of the day! This is such a powerful payment method because you remove many of the inherit risks without sacrificing your bottom line.
Why You Should Utilize Non-Recourse Loans
After truly evaluating your percentage of default payment plans you might find that offering your patients non-recourse loans just makes sense. When patients are on payment plans offered directly by their healthcare provider, any negative outcome directly affects the healthcare provider’s bottom line and patient satisfaction scores. This means if they default, you are losing money. If they aren’t paying, you have to consistently get ahold of them and remind them. The cost of resources like paper, agents, collections or even a charity offering all add up to a substantial amount of savings opportunity.
By shifting these responsibilities to financial loan professionals, you are increasing the likelihood that you get paid AND eliminating the risk of defaulted payments negatively affecting your liquidity and reputation.
How to Get Started
At HealthPay24, we offer a full-service payment platform that can address many needs and concerns that your practice might encounter when attempting to collect payments. While we can provide standard payment plans for your patients (and have extended its application in this new normal), one thing that sets us apart from our competitors is our partnership with Curae, a non-recourse loan provider. Integrated into our platform, their services are easily accessible for users. Access to a reliable third-party lender coupled with our easy-to-use digital payment platform gives you the best possible chance to receive payment in full.