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In today’s evolving healthcare landscape, patient responsibility for healthcare costs has grown substantially, and as a result, the collections process has become a pivotal component in sustaining a healthy revenue cycle.

 

In today’s evolving healthcare landscape, patient responsibility for healthcare costs has grown substantially, and as a result, the collections process has become a pivotal component in sustaining a healthy revenue cycle. Traditional approaches to collections may no longer be effective in capturing revenue efficiently. This article provides a roadmap for remodeling your collections process, offering actionable insights, practical examples, and case studies to help healthcare organizations optimize their revenue cycle through a more strategic collections approach.

Modernize Your Collections Cycle

With a larger portion of revenue coming directly from patients, optimizing each aspect of your collections cycle is essential. In many cases, post-service collections might be the only opportunity to collect. To secure patient payments, practices should invest in a well-structured collections process, refined to maximize successful outcomes.

One of the projects we undertook for a large multi-specialty clinic involved reengineering its collections process by implementing automated follow-ups. This significantly increased the clinic's patient collection rate. By sending a series of automated reminders, we reduced the time to collect payments by 20%. This improvement allowed staff to concentrate on more complex cases, ultimately enhancing the overall cash flow.

Be Strategic with Integrations

One of the key areas for remodeling collections is to integrate patient-facing transactions into your systems, eliminating as much manual intervention as possible. This automation can streamline the collections process and simplify the patient experience.

Here are practical steps to leverage integration for improved collections:

Utilize Stored Payment Information: If a patient has stored payment information, use it to automatically process outstanding balances.

Automate Statement Processing: If a patient has no coverage or payment method on file, set up systems to automatically send a real-time statement to the guarantor.

Trigger Statements Post-Claim Adjudication: For insured patients, after claim adjudication, route any remaining balance to the statement process, and deliver this to the guarantor via text, email, or the patient portal.

Promote Self-Service Payment Tools: Enable patients to pay through smartphones or online portals. Self-service tools provide patients with an easy way to view and settle their bills without administrative intervention, helping to accelerate collections and reduce workload.

Case in point, a mid-sized hospital in Los Angeles, California implemented a patient portal that allowed patients to view bills and make payments online. By integrating text message reminders for outstanding balances, they saw a 15% increase in on-time payments and a significant decrease in billing-related calls, enhancing both patient satisfaction and operational efficiency.

Revamp Your Collections Schedule

An efficient collections cycle minimizes delays in communication and maximizes the likelihood of prompt payment. Instead of using arbitrary schedules (e.g., based on alphabetical groupings), a well-designed cycle initiates as soon as patient responsibility is established. An ideal collection schedule should focus on closing the balance within 90 days or less.

Here’s what a sample collections communication schedule would look like:

Day 0: Initial Statement

Day 30: Second Statement

Day 45: Third Statement

Day 70: First Collections Notice

Day 73-74: First Nudge Notification

Day 75: Second Collections Notice

Day 78-79: Second Nudge Notification

Day 90: Final Notice

By specifying a due date on each statement and following through consistently, practices can maintain a predictable and reliable process. Some practices have further condensed this process by limiting the cycle to two statements and a collections alert, or by aligning it with bi-monthly payroll cycles to make payments more convenient for patients.

For instance, we tightened the collections schedule for a family practice, shortening its billing cycle from a 30-day to a 15-day cycle, and observed that patient payments aligned more closely with their paydays. As a result, the practice reduced its average collection time from 120 days to 85 days, improving cash flow and decreasing the number of overdue accounts by nearly 25%.Read More