Hospitals Face Cash Flow Crisis as Patient Self-Pay Increases

Online bill payment is the new norm, report finds

With rising health care costs and higher health insurance deductibles, hospitals could find themselves in trouble with patient bad debt if they don’t make improvements in collecting out-of-pocket payments, according to an article in HealthData Management. The Boston-based Aite Group predicted that patient payments to hospitals will increase at a compound annual growth rate of 10% from 2015 to 2019, growing much faster than the 6% self-pay rate of the health care industry as a whole during the same period.

Mike Trilli, senior health insurance analyst at Aite Group, warned that the looming cash flow problem can’t be solved by hospitals’ electronic health record vendors. Instead, he said, hospitals need to look to bill payment vendors whose core competencies and capabilities are better suited for dealing with rising patient self-pay collections.

It’s critical for hospitals to devise ways to outsource those collections that enable them to get paid and effectively allow these third parties to manage the collection relationship, Trilli said. The good news, he added, is that hospitals can avert a cash flow crisis if they ramp up initial point-of-service and bill paying investments to create an experience that promotes patient use of digital self-servicing channels.

Toward that end, the Aite Group report projects that mailed payments will decrease from 68% of all hospital bill payments in 2015 to 40% in 2019; at the same time, Web-enabled bill payments will increase from 18% to 40%; phone-based payments will increase from 8% to 14%; and in-person payments will remain steady at 6%.

Online bill payment is the “new norm” in the hospital industry, according to the report. Currently, hospitals offer online bill-payment capabilities through a variety of vendors, revenue cycle outsourcing companies, and claims clearinghouses.

Source: HealthData Management; April 19, 2016.