Hospital Collection Practices Under Public Scrutiny

Hospitals are re-evaluating their billing, charity-care and debt-collection practices.
Public relations problems are occurring with some classes of patients who have few or no financial resources.
Hospitals have charitable responsibilities that can help provide payment assistance.
Some hospitals do not have adequate policies and procedures in place to identify these types of accounts prior to the accounts being billed and ultimately turned to billing companies and collection agencies.

A. Pre-Service Financial Counseling

Identifies patients who can and cannot pay.
Establishes payment terms early in the account cycle.
For a poverty patient, the focus can be on qualifying for government assistance.
Charity qualifications should not be done after the fact.

Not-for profit hospitals must provide a certain amount of charity care.

Indigent identification is imperative early on.

Know zip codes.
Study demographic information.
Use companies who will identify outside resources and qualify indigent patients for these resources.

B. Communication with the Patient

Often the full financial effect of an illness doesn’t impact a patient until after the fact.
- Patient receives bills from physician, hospital, labs, etc.
- Patient is overwhelmed by charges.
  - Individual becomes disabled and has to stop work.
  - In a short period of time the individual goes from full financial viability to difficulty making payments on outstanding medical bills.
The hospital must maintain open lines of communications with patients.
- It’s human nature that some people would rather ignore a medical bill than submit to personal investigation of their finances.
  - This is a perfect opportunity for the hospital to “Educate” the patient and the community about ways they can have their medical bills paid.
  - This helps the patient become more comfortable with the situation and helps the hospital maintain good public relations in the community.
  - The following is a true life example of an HRS hospital client that took a proactive approach in handling charity accounts:

The hospital decided to use the Financial Counselor method of making early determinations about a patient’s ability to pay for services being received at the hospital.

To make the community aware of the hospital’s dedication to making the plan work, the hospital asked the local newspaper to visit the hospital and develop an article that would outline the hospital’s plan to implement the Financial Counselor process. The plan would assist patients who needed help in determining how they could meet their obligation to the hospital for an upcoming admission.

The newspaper cooperated fully. They took photos of the Financial Counselor at her desk and followed with a complete story about how the hospital was going to investigate, through the Financial Counselor, the possibilities for each patient to make financial arrangements for the hospital bill or to apply for any and all public assistance programs including the hospital charity plan and the indigent care plan of their county.

The stigma of the “charity” label has kept many deserving patients from cooperating with hospitals that don’t aggressively pursue these cases. The Financial Counselor approach bridged the gap more comfortably.

In this particular hospital the Financial Counselor didn’t always have adequate time to actually do charity and indigent care work-ups so a position of Social Services Worker was established to take over on accounts that were more likely to fit into these categories.

Patients who were not candidates for assistance because of income were thoroughly financial counseled to determine the proper repayment plan for their charges.

As a result of the implementation of these ideas, the hospital was able to maintain good public relations in the community while obtaining better deposits and setting up acceptable monthly payment plans with patients.

C. Communication with the Vendor

Often it is the outside billing company or collection agency that first identifies a patient’s inability to pay.
The hospital must clearly communicate with the vendor how to handle these situations.
Sometimes the vendor can help complete the required Charity Application through interacting with the patient.
The vendor should provide a regular Charity Report to the hospital to help identify patients who may be unable to pay.

D. Revitalize the former “Social Services Worker” position that can:

Identify government & community resources available to the patient.
Head off problem accounts before they become issues.
Respond quickly and directly to public relations issues as they occur.
Represent the hospital in a positive way and even conduct fund-raising as a result of their experiences.

E. Re-evaluate & Upgrade:
Example: Another HRS client, a 200-bed hospital decided to do a better job of handling their accounts receivable. A number of problems were identified:

Good insurance and demographic information was not being obtained.
It was difficult to estimate what the patient owed while the patient was still in the hospital.
Clerks were not adequately trained to ask patients for deposits and balances.
Charity patients were not correctly classified before the billing process began.

The hospital decided to take a very unconventional approach. A number of things were done, but four items can be highlighted:

The hospital developed a special computer application that admission clerks could use to accurately estimate patient liability at discharge.
Employees were transferred out of the patient-pay collection area into the admissions area.
Salaries were upgraded to find and keep good employees.
Patient-pay accounts were outsourced for Early Out.

All of this meant that the accounts receivable focus moved from the back end to the front end in order to:

Obtain accurate demographic information.
Identify early on those accounts that should be classified as charity or limited patient pay.
Collect as much as possible in deposits.
Reduce costs associated with attempting to collect the patient balance after the patient left the hospital.

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