Three Key Factors to Consider When Selecting and Contracting Collections Vendors
Health systems are increasingly dependent on vendors to help manage a myriad of revenue cycle processes, with the average hospital employing 15 outsourcers. This equates to an industry-wide cost of $30 billion annually. While the goal of partnering with outsourcers is to improve collections while lowering costs, it can be challenging to evaluate the real return on these vendor relationships. That may be why 64% of hospitals say they are dissatisfied or unsure about their vendors’ performance.
One of the critical elements of forging an outstanding vendor relationship is to identify and procure the best vendors up front. However, doing so can be challenging. What vendors say they can achieve often does not equate to actual results. When selecting and contracting collections agencies for your hospital, be sure to ask for examples of actual results, especially in the following three areas.
Aging accounts receivables
The broad adoption of high-deductible health plans has led to an explosion in self-pay accounts that, in turn, have caused an increase in aging accounts receivable for most hospitals. You would think placing accounts with agencies would help alleviate that pressure. Yet, nearly 23% of all accounts placed with vendors are aged beyond 120 days. A lack of data insight and poor inventory management is a leading factor.
It is important to ask vendors about their inventory reconciliation processes and whether their technology integrates with the hospital’s accounting systems. How do they address account holds, patient complaints, and billing disputes? Without a clear process for managing these types of issues, it is nearly impossible for hospitals to close the loop on accounts.
When accounts become stagnant, it often means vendors aren’t properly using patient segmentation. When those analytics are based on poor predictive variables, or when they use presumptive charity scoring to determine propensity to pay, it can lead to money left on the table. Patients who were at one time unable to pay often experience a change in financial circumstances that would remove them from non-payer status.
Vendors should be required to provide in-depth detail about their patient segmentation and scoring methodology, as well as their standard service level agreements (SLAs) and proof of regulatory compliance. Adherence to industry best practices is also important. Steer clear of those that aren’t able to provide this information.
The patient experience
Patients often can’t tell the difference between a collections agency call or a call from the hospital’s own billing department. This means that each patient financial engagement—whether through the hospital or the agency—is a reflection of the hospital’s brand reputation. A poor experience can negatively impact patient satisfaction scores and cause patients to go elsewhere for additional healthcare needs. They may even avoid getting the care they need altogether.
Hospitals should look for vendors that see themselves as an extension of the hospital’s billing department. They need to understand and adopt the hospital’s culture in each patient financial engagement. Look for vendors that have ongoing education for their reps and for those that do regular auditing of collection calls. It is also helpful to understand their employee turnover rate as high turnover can indicate systemic problems in processes or company culture, which can negatively impact the patient experience.
A better approach
As self-pay accounts continue to skyrocket, the role of collections vendors becomes increasingly valuable. Yet, all vendors aren’t created equal, and hospitals need to be extremely diligent in their evaluation and choice of collections partners. However, this takes time and access to vendor data that many hospitals do not have. Partnering with an “at risk” vendor performance management company like Healthfuse can help.
Healthfuse has in-depth insight on approximately 3,000 vendors, including demographics, service levels, and pricing. Using its proprietary technology and analytics capabilities, Healthfuse can easily match the right vendor to each hospital’s unique needs.
Even after a vendor is chosen, many hospitals don’t have the data needed to negotiate the contract effectively. Healthfuse does. With its extensive access to vendor contracting data, Healthfuse has the information necessary to achieve the most favorable terms for every hospital.
The time to act is now.
When vendors don’t perform, it can inhibit a hospital’s long-term financial viability. As pressure from increasing self-pay and government regulations continues to grow, hospitals need to ensure they’re receiving the highest level or return on their outsourcing investments. Identifying, evaluating, and contracting with those vendors takes time and a high level of data insight on both vendors and industry best practices. Partnering with Healthfuse can help hospitals quickly build a team of high-performing vendors that return greater efficiencies, lower costs, and optimal profitability.