Patient financial responsibility has surged in recent years. As a recent TransUnion Healthcare analysis notes, patients in 2017 were responsible for 12.2% of their total healthcare bill in the first quarter of 2017. This compares with just 8% percent of their total bill during the first quarter of 2012. Commercially insured patients experienced a patient balance after insurance increase of a staggering 67% percent, growing from $467 to $781 over the same five-year period.
Fortunately, new and innovative financing options have emerged in recent years, providing patients with valuable assistance in covering their expense for treatment. Such options can also help providers of treatment, like ambulatory surgery centers (ASCs), more effectively collect these higher patient balances.
One such model garnering significant attention in the ASC industry is the provision of a secured loan to patients that covers their surgical costs. When an ASC offers this model and patients take advantage of it, the patient receives a loan package designed to meet his or her budget. Following the patient's procedure(s), the ASC receives funding that covers the patient's balance, with the lender then managing collections activities. This benefits both patients, as they can receive surgical care and pay down the loan over a comfortable period, and ASCs, which receive expedited payments.
But that's not the only benefit to surgery centers. Patient financing options like this model bring about substantial improvements in many areas that ultimately enhance revenue. Here are just four of the ways patient financing can greatly accelerate an ASC's revenue cycle.
1. Reduce cancellations. If patients have concerns about their ability to pay for a surgery, they are more likely to cancel the procedure. If this cancellation occurs on or close to the day of the scheduled surgery, an ASC may struggle to fill the open OR time. When that happens, the ASC not only loses the revenue (reimbursement and patient portion) that would be generated by the procedure but also still incurs expenses associated with surgical, nursing and ancillary staff involved in the procedure (performing and scheduling). The scheduled surgeon may find the experience frustrating and question what could have been done to prevent the cancellation. Finally, the ASC and referring practice will now need to work to (hopefully) reschedule the case.
With a financing offer that patients embrace, these negative developments can all be avoided. Benefits also include increases in patient and surgeon satisfaction.
2. Grow surgical volume. Uncertainty about the ability to cover surgical costs might keep patients from moving forward with an outpatient procedure. But a financing solution allowing patients to cover surgical expenses in a manner that does not create significant financial challenges may encourage them to proceed with scheduling their treatments, helping the ASC secure the surgical volume.
In addition, financing can be an effective marketing mechanism. If patients are aware that an ASC offers financing options, they may be more likely to seek care at that surgery center rather than a facility where financing is unavailable. As word spreads about the offering, the ASC may elevate its standing as a preferred site for surgery.
3. Decrease A/R and increase cash flow. When an ASC struggles to collect all or some of what patients owe for their surgical care, its accounts receivable (A/R) days can quickly increase. And the longer a bill is unpaid, the less likely it is that all money owed will be captured. Slow payments hinder cash flow and could reduce the ability for an ASC to pay its bills, make new investments and provide ownership distributions.
A patient financing solution that pays ASCs within just a few days of a procedure will cut days in A/R. It will provide the surgery center with enhanced flexibility concerning how to use cash reserves. The facility is also protected if patients default on their payment, as there is no recourse to the ASC or providers.
4. Reassign staff. When business office staff members do not need to focus as much on patient collections tasks (e.g., follow-up calls/emails, mailing of statements, payment processing, records updating), they can be assigned to other critical revenue cycle needs. These can include following up on outstanding claims, reviewing denials and filing appeals. Increased efforts in these and other areas will help improve collections, reduce A/R and grow the overall bottom line.
Randy Bishop (email@example.com) is a partner with Surgical Funds, which facilitates patient financing solutions to supplement out-of-pocket expenses for ASC procedures.