Take a few seconds to reflect on the following question:
When was the last time you were financially obligated to purchase a service or product without knowing the price in advance?
Few businesses operate in this form of an agreement. One might argue that financial advisory or investment services have characteristics of this pricing structure. However, you pay a financial advisor to manage or grow your portfolio’s market value, so it is impossible to calculate your fees before the period ends. Despite this arrangement, your financial advisor will still disclose the percentage, which your fee is based on, at the beginning of the period.
Due to the urgent need for many procedures, patients often find themselves unaware of their financial obligation before receiving care. Patients carryover their acceptance of this business arrangement to other forms of elective care as well. The thought process here is, “this surgery will improve my current well-being, and I will deal with the financial consequences in the future.”
Unfortunately, this mentality leads to patients delaying their financial responsibility to help stomach the cost of a procedure. In more egregious situations, the patient’s balance becomes delinquent, and the practice writes off their account to a collection agency.
In recent years, patients have effectively become the payer, as more beneficiaries receive coverage under high deductible health plans. Over 50% of the allowable is the patient’s liability in the early part of the year. The solution to minimize delinquent accounts and collect patient balances requires transparent pricing.
62% of patients say that knowing their out-of-pocket expenses in advance of service impacts the likelihood of pursuing care. In essence, most of your patient population may not have the financial flexibility to pay for care. Nevertheless, some practices opt to continue to perform the surgery. The fatal assumption is that more surgeries equate to more revenue. Surgeries have a higher revenue potential, but this assumes that patients will pay on time. Research shows it is 4x more difficult to collect from patients versus an insurance company.
It is critical to structure financial policies to ensure that patients understand their responsibility before they receive care. A physician’s time is his or her most valuable asset. By performing elective surgeries on patients that are unable to pay, you reduce the procedure’s profitability. In turn, the collections from these procedures receive a haircut and pay less than the entitled amount.
The best practice is to provide transparent pricing upfront. Instead of surprising patients with a large balance that they cannot financially stomach, your surgical coordinator can communicate the patient’s responsibility during the surgical onboarding process. During this one-on-one time with the patient, we recommend collecting up to 100% of the patient’s out-of-pocket expenses.
By collecting more of the patient’s balance upfront, your practice increases cash flows earlier in the revenue cycle and minimize delinquent accounts. So, who is prime for estimating costs?
- High deductible health plans
- Most surgical services
- Non-preventive (covered at 100%) care
- Multiple procedures performed on the same day
- Patients wanting to understand their benefits and out-of-pocket liability
- Patients who have a history of intricate collections, past bad debt, or residual balances
Is your practice providing patients with transparent cost estimates? Find out how we can help your practice by scheduling a complimentary consultation today: