November 2009

The Changing Face of Self-Payment in Hospitals

HFMA’s Healthcare Financial Pulse

HFMA’s Healthcare Financial Pulse is sponsored by:

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Impact on Self-Pay Receivables

• Part I. What hospitals are experiencing• Part II. What hospitals are doing• Part III. Keys to success• Appendix A. Additional resources• Appendix B. Survey methodology

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Part I. What Hospitals Are Experiencing

Overview of Findings

• 97% of hospitals surveyed have experienced an increase in self-pay accounts receivable compared with prior fiscal year

• Small hospitals were most likely to experience a self-pay increase of greater than 10%

• Receivables are growing faster than patient revenue at almost one-third of respondent hospitals

• Emergency departments and unscheduled outpatient services are experiencing the most self-pay growth

• Difficulty estimating the cost of charges is a significant barrier to point-of-service collection

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Self-Pay Trends: Accounts Receivable

97% of respondents experienced an increase in self-pay accounts receivable compared with the prior fiscal year. Of these hospitals:

• More than one-third have experienced an overall increase of 10% or greater

• 39% have experienced a growth in self-pay balance after insurance of 10% or greater

• One in five have had a 10% or greater increase in bad debt write-offs

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Self-Pay Trends: Hospital SizeSmall hospitals (1-100 beds) were most likely to experience a self-pay increase of greater than 10%. Of these small hospitals:

• 45% experienced a greater than 10% self-pay increase, compared with 36% overall.

• 64% saw self-pay balance after insurance rise by more than 10%, compared with 39% overall.

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Self-Pay Trends: Receivables Growth as Compared with Patient RevenueReceivables are growing faster than patient revenue at almost one-third of hospitals. Only 10% indicate that patient revenue is outpacing receivables.

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Self-Pay Trends: Service Area

Emergency departments and unscheduled outpatient services are experiencing the most self-pay growth.

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Part II. What Hospitals Are Doing

• 72% of respondents report that they are devoting moderate or substantial efforts toward point-of-service collections in their facilities– Only 50% of hospitals that are shifting resources toward

point-of-service collections are seeing decreases in their cost-to-collect performance indicator

• Respondents are indicating that difficulty in estimating the cost of services to be received remains the most significant barrier to more extensive point-of-service collections

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More than half of respondents say difficulty estimating cost of charges is a significant barrier to collecting at time of service.

Self-Pay Trends: Barriers to Point-of-Service Collection

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Revenue Cycle Response to Market Trends

Respondents have increased accessibility of financial counselors and have increased collection activity

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Part III. Keys to Success

• People– High standards for hires– Compensation structures aligned to business goals and

employee satisfaction– Devote resources to education

• Process– Use formal structures to obtain stakeholder input– Target improvement around areas most affecting customer

experience

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Part III. Keys to Success

• Technology– Selectively use technology for high volume transactions– Maximize value of technology investments by improving

processes before automation– Consider dedicating IT staff to revenue cycles systems and

support

• Metrics– Seek the customers’ perspectives through surveys and

customer advisory panels – Develop and regularly report measures that span the entire

revenue cycles operation– Consider non-traditional metrics such as customer

satisfaction and employee turnover

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Part III. Keys to Success

• Communication– Support a positive scheduling/registration experience

– Provide estimates of financial obligations early in the patient interaction

– Publicize financial assistance

– Provide clear and simple billing and collections materials

• Culture– Organizational leadership support for the revenue cycle at the

highest level

– Demand high performance from staff across the revenue cycle

– Make innovation a priority

– Celebrate success

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• Research, how-to guidelines, industry analysis, and case examples

• New resources added regularly

Appendix A. Additional Resources

HFMA’s Healthcare Financial Pulse

Visit www.hfma.org/pulse

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A sample of the resources availableLeadership and planning• Key Legal Issues … as a Result of the Financial Meltdown (how-to guidelines)

• The Next Wave of Mergers and Acquisitions: What’s Your Organization’s Position? (how-to guidelines)

Cost and quality• Benchmarking Tools for Reducing Cost of Care (how-to guidelines)

• Case Study: Seamless Service Line Management (case study)

Preserving cash • Leveraging Business Intelligence for Revenue Improvement (case studies)

Capital• Financing … A Guide for Small Hospitals (how-to guidelines)

• Navigating Today’s Opportunities for Capital (how-to guidelines)

Visit www.hfma.org/pulse

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• E-mail survey sent October 2009 to revenue cycle leaders and executives in hospitals and health systems

• 92 responses received. Summary of hospital respondents:

Appendix B. Survey Methodology

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HFMA is the nation’s leading membership organization for more than 35,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, and other organizations. HFMA’s purpose is to define, realize, and advance the financial management of health care by helping members and others improve the business performance of organizations operating in or serving the healthcare field. For more information about HFMA’s Healthcare Financial Pulse, visit www.hfma.org/pulse.

HFMA’s Healthcare Financial Pulse project is sponsored by: