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Financial Management – Unpaid bills threaten to undermine health care sector

May 09, 2017
Preston Glenn
From the May 2017 issue of HealthCare Business News magazine
There is a real epidemic occurring in the health care industry, a dangerous one.

It’s one that threatens to undermine the revenue of everyone, from hospitals to private practices, and all signs point to one thing.

The problem is increasing unpaid health care bills. In 2012, hospitals faced almost $42 billion in uncompensated care. Even more frightening, a report by McKinsey & Company estimates that the rate of bad debt to health care providers is growing by roughly 30 percent a year.

With fewer uninsured Americans now than in the past, it may initially be difficult to understand where all the debt is coming from. The answer lies in payment responsibility and increasing out-of-pocket costs.

While the uninsured rate has dropped from 15.7 percent in 2009 to 9.1 percent in 2015, the number of consumer payments owed to health care providers has increased 193 percent. The burden of payment has been moved from companies and the government to patients.

Primarily this shift has been led by an increase in the number of insured who opt for high deductible health plans (HDHP), especially millennials. In 2015, 24 percent of employees opted for these high deductible plans through their employers, with more choosing HDHP as part of the Affordable Care Act.

Consumers now face paying more for their health care out of pocket than ever before. That’s certainly a problem in and of itself, but what compounds the issue is the lack of payment options for patients. Many health care providers remain shackled to paper-driven and inefficient billing systems.

Even for those that have electronic systems in place, ease of payment isn’t always part of their solution. In some cases, difficult and confusing user interfaces cause problems. In others, the ability to pay online doesn’t even exist. Today’s consumers are increasingly tech-savvy. But even an increased understanding of how to use apps and the web can’t replace the value of intuitive, or frictionless, user experiences.

For some health care providers that offer electronic payments, their applications exist in the same technology ecosystem as those that contain personal health care information (PHI). As a result, providers must require users to validate themselves through the system, answering a multitude of questions when all they really want to do is simply pay a bill.

Disparate, or siloed, systems can cause similar problems. If a patient receives multiple bills with different account numbers for the same visit and must make each payment separately, the convenience of being able to pay online or through an app disappears.

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