The Challenge of Getting Paid

Jun 08, 2015 at 02:32 pm by Staff

As the American culture shifts to grind more financial responsibility onto patients, hospitals are facing more costly hurtles.
A few sobering facts: 81 percent of true self-pay responsibilities are never recovered; 75 percent of patient responsibilities are never collected; and self-pay is the third most frequent payment method after Medicaid and Medicare. On average, only 10 percent of patient receivables is collected at the time of service. More than half of all bad consumer debt relates to medical bills, leading an unprecedented number of patients to file for bankruptcy protection.
“Hospitals have been dealing with self-pay for some time, but not in the volume or dollars we see now,” said Sheila Schweitzer, CEO of PatientMatters, a 30-year veteran in healthcare administration – half on the payor side; half on the provider end. “The cash at stake is substantial and harder to collect than a third party. It’s imperative to have a patient receivables strategy in place, or bad debt and charity care will continue to skyrocket.”
David Shelton, COO of PatientMatters pointed out the predicament: “The challenge we must address is helping our hospitals adapt, and adapt quickly.”
For Schweitzer, PatientMatters was preceded by CareMedic Systems Inc., a healthcare technology revenue cycle firm with 1,600 hospitals and 1,000 ancillary facilities at the time it was sold in 2009. CareMedic successfully brought to market the first enterprise class revenue management system: the electronic Financial Record (eFR).
“Even though we focused on third-party billing and management, it became very obvious that patient receivables would be the next big challenge,” said Schweitzer, noting that in 2007, only 4 percent of revenues were coming from patients. By 2011, patient revenues averaged 32 percent. “The problem was growing really fast. Hospitals and physicians just aren’t accustomed to healing patients and then asking for money. We felt there had to be a real behavior change of hospital staff and patients to improve the collection ratio of patient receivables.”
Schweitzer and her executive team researched the market and couldn’t find a company with the technology infrastructure that adequately supported the data needed to convert patients’ complexities around their coverage.
“We found that even the tightest-run patient access departments are having difficulty getting their arms around the evolving patient receivable,” she said. “The fact is, though healthcare reform may be a notable accelerant, the issue runs much deeper. Hospitals are seeing their revenue sources change completely as patients leapfrog private insurance (as) the third-largest payor.”
Before opening PatientMatters, Schweitzer made two strategic acquisitions, including MASH (Medical Advocacy Services for Healthcare), a Medicaid eligibility service since 1988, and Kramer Technologies, a technology firm.
“We took our time to really understand our market and hone our training, communications and processes to satisfy the hospitals and the patients,” she said. “We’re very bullish on where we are.”
Since the firm opened in 2012, revenues have reached $25 million and employment tops 200. Based in Orlando, with offices in Houston and Ft. Worth, Texas, PatientMatters has hospital partnerships across the United States. The most recent hospital contract inked was St. Luke’s Cornwall Hospital, with campuses in Newburgh and Cornwall, NY.
“We guarantee cost savings,” said Schweitzer. “We put resources on staff at the hospital. We only generate revenue after the hospital has seen an improvement. We’re not subscription- or fee-based. We actually align with the hospital. We only win when they win.”
PatientMatters focuses strongly on the unique market of community hospitals, which cannot afford to have high patient receivables to continue to provide a sustained high level of care.
“We feel so strongly that community hospitals are vital to this country,” said Schweitzer. “They’re usually the largest employer in the community and provide very good care. We worked on modeling our processes and approach for that mid-tier market.”
PatientMatters places personnel with significant hospital operations experience in contracted hospital roles such as executive director of patient access and patient advocates.
“We bring in statements we’ve carefully and thoughtfully designed with great input from focus groups of patients,” she explained. “On the back of the statement, we describe what everything means. We bring in many programs to help patients find ways to pay their bills. We find that most patients want to pay their bills if they understand what they’re being charged.”
When PatientMatters co-sponsored Orlando’s first annual C3 CFO Summit held mid-January at the Waldorf Astoria, 12 CFOs representing 27 hospitals in nearly a dozen states discussed their most immediate cash flow concerns.
“All hospitals struggle with the same patient receivables issues, whether expansion, community, or part of a large healthcare system,” said Schweitzer. “The biggest surprise of the summit was the lack of education of the patient on the financial aspects of medical care. Hospitals and caregivers have been put in the position of educating the patient around their insurance benefits. Hospitals don’t really like it. They weren’t anticipating assuming that role, but they’ve had to. The insurance exchanges are very confusing.”
Fred Brown, chairman of Fred L. Brown & Associates, noted the conference-themed Courageous CFO Conversations “presented attendees with an unstructured, spirited discussion about the big financial issues facing hospitals today.”
“Sponsors invested the time and money to sit down and ask the tough questions,” he said. Nixon Peabody and PNC Bank were also event co-sponsors. “The attending hospital CFOs responded with enthusiasm. It was a risk that most companies would be unwilling to take. It was dynamic.”


TAGS: patient receivables, Medicaid, Medicare, Sheila Schweitzer, PatientMatters, Chris Rakoci, CareMedic Systems Inc., electronic Financial Record, eFR, MASH, Medical Advocacy Services for Healthcare, St. Luke’s Cornwall Hospital, community hospitals, PNC Bank, Nixon Peabody.

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