Hospitals lose out on millions of dollars in bad debt each year. According to a survey of hospital executives, more than one-third of hospitals have bad debt of over $10 million.1 While some of this is unavoidable — an ideal range of 12-15% is recoverable1 — there are strategies you can put in place today to help reduce the impact of bad debt accounts.
Below are four tips to help scrub your bad debt accounts to confirm you’re maximizing reimbursements.
- Don’t give up on payment opportunities. Even if payment hasn’t been received prior to accounts going to collections, there still could be an opportunity to recover monies. Focus on collecting first from accounts with the highest probability to pay. Search for missed insurance coverage on all accounts, not just self-pay. Evaluate outsourcing your small balance and $0 accounts to ensure you’re maximizing yield. And don’t forget about your payers — denials and underpayments represent millions of dollars in revenue for most hospitals, and a deep dive on unrealized revenue can drive significant yield prior to year-end.
- Get your charity determinations in order for 501r compliance. Not-for-profit hospitals need to properly comply with IRS 501(r) requirements to ensure tax-exempt status. This can include utilizing presumptive eligibility tools to segment accounts, as well as screening patients for financial aid early on. Many of the best practices related to 501(r) are also useful benchmarks for for-profit organizations to consider.
- Give patients various and customized payment options. With more people on high-deductible plans, it’s not unusual for patients to be unable to settle their bills in one payment. It’s critical patients are engaged early. Offer an estimate of out-of-pocket expenses so they can understand their financial obligations and start planning for them. Evaluate each individual patient based on their unique financial situation. Be sure your staff is trained to talk about payment plans, qualifying for financial aid or charity care, and making upfront payments. All of these options can lead to realized revenue and help reduce bad debt.
- Automate collection processes. Collections can be a very tedious, time-consuming process — and one that depends on accurate data. As strong as your internal team may be, partnering with a third-party vendor that utilizes automated processes can often uncover additional revenue your team may not know exists. Take these learnings and, when possible, apply them to your internal processes. An automated, close examination of all accounts for unpaid or underpaid revenue can be the difference in being paid the correct amount in the shortest time and at a lower cost to collect.
Putting these tactics into action can help ensure your hard-earned revenue gets paid.