Introduction

Patient balances matter more than ever

Introduction

Patient balances matter more now than ever

For years, health systems have experienced a steady rise in patient responsibility balances. The inexorable increase in healthcare costs plays a role of course, but the growth of High Deductible Health Plans in the last decade has dramatically accelerated this trend. Once a small part of Net Patient Revenues for hospitals and health systems, Patient Balances now account for over 30% of NPR. Since the industry's collection rate on patient balances is woefully low, failure to evolve patient financing strategies can have meaningful financial impact on providers.

In 2023, a slowing economy, sectors hit by mass layoffs, fears of a recession, and inflation stubbornly hovering near 40-year highs, are all affecting patients' ability to pay.It's time to take another look at patient financing.

In 2022, hospitals had their worst financial year since before the COVID-19 pandemic, according to recent Kaufman Hall data.

Operating margins have dropped dramatically from pre-pandemic levels; more than half of hospitals now have negative margins.

Rising healthcare costs, coupled with increased enrollment in high-deductible health plans--from 4% in 2006 to 28% in 2021--are impacting patients’ ability to pay. Out-of-pocket costs have risen 230% in the past 10 years.

The Kaiser Family Foundation found that more than 4 in 10 American adults carry medical debt, and one-fourth of that group owes more than $5,000. About 20% say they don’t expect to pay off their debt.

The good news? Patient financing offers a big opportunity for revenue capture 👉

All signs point to increasing constraints around cash flow and operating margins, with dire implications for financial performance.

Adding to the challenge: a growing array of patient financing solutions, each with different business models, pricing structures, and trade-offs for providers to consider.

But with challenge comes opportunity. Revenue cycle leaders who evaluate their current needs, understand the landscape of vendor offerings, compare different options against their current baseline, and select a best-fit approach can quickly make a meaningful impact on their organization's financial performance.

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This shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years…On average, healthcare consumers are now responsible for 30% to 35% of their healthcare bill. Patient payment and collection practices are highly complex, and with high deductibles, patients have evolved into a primary payer source.”

-Jonathan Wiik, author of The Patient is the New Payer

In this guide, we’ll explore and evaluate various patient financing approaches, so you can deploy the tools that will best benefit your organization and patients.