Help patients pay their hospital bill with a reusable line of credit.
By Nicole Thomas, CRCR, Director of Client Success, iVitaFi
Other benefits: Increase Revenue, Decrease Denials, Improve Outcomes and the Patient Experience
According to a study published by Health Management Technology, patient no-shows cost our healthcare system more than $1.5 billion each year. That translates into 60 minutes lost time and $200 lost revenue per vacant slot. I’ve seen rates as high as 40% in some cases.
In order to try and understand this better, I once conducted an audit for a local hospital to determine just how large of an impact no-show appointments and patient cancellations were in their radiology center. Here’s what I found:
- 32% of their patients didn’t keep their appointments, 12% – 14% of which were either no-shows or patient cancellations.
- They lost $490k in canceled MRIs and $217k in canceled ultrasounds in a single month.
- Over a 12-month period, they lost a total of $13M in revenue potential in radiology alone.
With further research, I found that a large percentage of their no-show appointments and patient cancellations could be traced directly to their financial clearance processes and the patient’s inability to come up with the required financial obligation. A deeper dive uncovered several issues.
How a shortened financial clearance process can trigger no-show appointments and patient cancellations.
The main issue pertaining to the no-show rate is around timing. Industry best practices indicate that the financial clearance process should begin at least five to seven days prior to the date of the procedure. In the case of this hospital, they were beginning the process just one to two days prior. This creates some substantial barriers for patients. For example, if they need a COVID test prior to the procedure, they need to be allowed sufficient time to request time off work and there needs to be enough time to get the test results back.
A short financial clearance process also doesn’t give patients enough time to find a way to pay. Research shows that 40% of Americans surveyed said they would be unable to cover a $400 emergency with cash, savings, or credit. This is an increasing problem due to the widespread adoption of high-deductible health plans. Average premiums for employer-sponsored family coverage have increased 55% in the past ten years while the average deductible has increased 79% over the same period.
For larger amounts, patients may be able to take money from a savings account or an IRA, or borrow from a relative – which, again, requires time. It can take longer to complete these transactions depending on the bank’s requirements or the relative’s ability to pull the money from their own accounts. In some cases, hospitals will cancel procedures if a patient can’t come up with even a down payment. This policy not only impacts the patient experience and, potentially, the patient’s health, but it also reduces revenue potential.
Another issue that is harder to measure but is just as relevant is shame. Patients may be embarrassed that they aren’t able to pay. Instead of admitting that to the registrar, they call to cancel later or they simply don’t show up for their procedure.
No-show appointments and patient cancellations negatively impact outcomes, denials and lost revenue.
Besides lost revenue, no-show appointments and patient cancellations can impact outcomes. One survey found that 64% of patients have put off or skipped care altogether due to costs. Of those patients, 25% of the missed appointments were for follow-up care, 18% were for a wellness visit, and 12% were for treatment, therapy, or surgery. When patients don’t get the care they need in a timely manner, their conditions can quickly deteriorate, leading to increased hospitalizations and visits to the emergency department. That, in turn, impacts revenue and patient satisfaction.
One more issue I want to point out is that a shorter financial clearance process can cause unnecessary denials and write-offs. Payers vary in the amount of time they require for prior authorizations. Even if the process begins but is not completed in that time frame, payers can deny the claim. They can claim that treatment had already started before authorization was approved or that the patient experienced a change in condition during the procedure. Denials in general are on the increase. In these challenging times, hospitals need to collect every dollar they’re owed and should take all precautions to prevent denials caused by a shortened pre-service financial clearance process.
How to reduce no-show appointments, patient cancellations, and write-offs.
Besides lengthening the pre-service financial clearance process, how can you keep patients from canceling appointments, reduce no-show appointments, and prevent write-offs from happening? One of the best opportunities is to offer payment plans that fit within each patient’s financial circumstances. In a 2018 survey, consumers said they would be more likely to pay their financial responsibility sooner if providers offered more flexible payment options. We’ve found that 98% of patients that enrolled in iVitaFi’s 0% interest, non-recourse lending program have gone through with their procedure.
A 2% patient cancellation/no-show rate is clearly an industry best practice! But a best practice is more than that: it helps patients get to their needed procedures, and it helps providers remain viable.
We’ve found that 98% of patients that enrolled in iVitaFi’s 0% interest, non-recourse lending program have gone through with their procedure. A 2% patient cancellation/no-show rate is clearly an industry best practice.
While some providers do offer extended payment plans, they are usually not offered until the patient goes into default. It’s understandable why providers don’t want to take on the heavy lift of managing multi-million dollar portfolios. After all, hospitals aren’t banks. Partnering with a third-party lender to offer patient financing is one of the easiest, fastest ways to get a payment plan option in place—one that can be offered up front, before the patient defaults.
When choosing a lending partner, it’s important to choose one that makes sense for the hospital. There are several ways to approach patient financing in addition to in-house payment plans: recourse lending and non-recourse lending. But which patient financing strategy is right for your hospital and your patients? Check out this infographic to explore the pros and cons of these programs and to learn more about the non-recourse lending program offered by iVitaFi.
The bottom line
Even before the pandemic, 40% of consumers said they had skipped recommended medical tests or treatment in the previous 12 months due to cost. Now add the economic stressors from the pandemic and the situation has become even more dire. Providers need to do all they can to remove financial barriers and get patients to keep their appointments so they can get the care they need when they need it, and to ensure optimal revenue generation. A few simple changes to the financial clearance process and partnering with the right lender can help them do just that. The result is reduced no-show appointments, reduced cost to collect, improved outcomes, and an enhanced patient experience.
Contact iVitaFi today to discuss non-recourse financing options for your patient population. Our program provides a no-interest line of credit for patients of all credit profiles, helping our partner hospitals throughout the U.S. improve cash flow and reduce patient bad debt. We help patients pay for their out-of-pocket costs, keeping them on the path toward complete physical and financial wellness.