A More Effective Way to Identify and Correct Self-Pay Case Recovery Issues

by | Jun 29, 2021

Making a complete financial recovery from the pandemic is likely to be more challenging for community hospitals than for larger health systems that typically have more resources and financing options. That means community hospitals need to be able to collect on every dollar they’re owed. When it comes to self-pay accounts, however, that effort can be difficult. Yet, in a time that self-pay accounts make up a greater percentage of a hospital’s revenues, it is a necessity.

According to an article in Health Leaders, the cost to collect on self-pay accounts is nearly three times as high as collecting on commercially insured accounts.[1] The longer those accounts go unpaid, the less likely it is to be paid at all.

What can community hospitals do to ensure maximum collections on self-pay accounts? Outsourcing can help. However, hospitals must be able to track and measure ROI on those partnerships. For community hospitals with limited resources, doing so can be challenging. Without full transparency into the vendor’s processes, hospitals are often at the mercy of those vendors to report their own results. Those results, not surprisingly, are often swayed in the vendor’s favor. Southeast Health has found the answer.

Southeast Hospital, managed by Southeast HEALTH, is a not-for-profit community hospital serving more than 600,000 people in 22 counties across Southeast Missouri and Southern Illinois. SoutheastHEALTH’s extensive care network is comprised of 50 care locations in 10 communities, including specialty care clinics covering more than 30 specialties. As the largest provider for community healthcare in the region, Southeast Health partnered with several community-based collections vendors, including early out self-pay, bad debt, and A/R follow-up. Southeast Health depended on these vendors to help achieve its revenue cycle goals.

Southeast Health’s director of revenue believed the hospital was not achieving the maximum return on those partnerships, especially with its early out self-pay outsourcers. An initial audit conducted by Healthfuse revealed that current self-pay outsourcers were only working 40% of their assigned inventory. Numerous patient accounts were identified that had never even made it to bad debt vendors. On top of that, the audit found numerous invoicing errors and an overall lack of accountability controls.

Southeast Health engaged Healthfuse to build and operate its Revenue Cycle Vendor Management Office (VMO). As part of this, Healthfuse would leverage its full suite of technology solutions, advisory support resources, and industry domain expertise to drive optimal bottom-line results for Southeast Health.

In three years with Healthfuse, Southeast Health achieved:

  • $13.6M in collections improvement
  • $347K in cost savings

The relationship with Healthfuse transcends-vendor it is a true collaboration. Healthfuse genuinely cares about improving the performance of our vendors, and they do so with careful monitoring and hands-on assistance. Healthfuse manages every service line, and we’ve seen a marked improvement. I consider them trusted advisors with an in-depth knowledge of revenue cycle best practices and keen business acumen. I would recommend them to anyone looking to improve their net revenue and business performance.” – Bonita M. Gregory, Director of Revenue Cycle

Correcting self-pay cash recovery

The issues Southeast Health experienced with its vendors are, unfortunately, not uncommon. To identify just how prolific these problems were, Healthfuse conducted a comprehensive study of more than two billion hospital accounts. The study included 8.31 million unique guarantors spanning 91 facilities in 29 states. What they found was startling; more than 50% of early-out and self-pay vendors were not compliant with best practices, service level agreements, or government regulations. Of all accounts placed with vendors at 31 – 60 days, 36.1% were never worked. At 121+ days, nearly 23% were never worked. Even with those accounts with balances under $250, which should be low-hanging fruit, nearly 19% were never worked.

Healthfuse can help hospitals identify opportunities for vendor performance improvement and then implement improvement or replacement strategies. To ensure ongoing compliance, Healthfuse can set up a Vendor Management Office and act on the hospital’s behalf, managing every aspect of the vendor relationship.

The bottom line is that community hospitals simply cannot afford underperforming self-pay vendors, especially on their journey to post-pandemic financial recovery.

[1] https://www.healthleadersmedia.com/finance/improving-self-pay-collections-one-proactive-approach