December 2008 | www.healthmgttech.com | Issue 12
	Adopting a Banking Mentality Toward Payments

By Douglas Braun

Whether you currently love them or loathe them, financial institutions have the most extensive payment management expertise of any group of organizations in the world. They can serve as an example of how healthcare providers should handle payments, especially cash payments, in a systematic, streamlined process. Point-of-sale payments to healthcare providers come in the form of self-pay payments, a term that encompasses out-of-pocket expenses such as copays, fees for classes and medical supplies or preservice payments.

According to recent self-payment figures compiled by Internet Payment Exchange, credit card payments are increasing while checks payments are decreasing. Cash payments, however, consistently average in the 20 to 22 percent of all payments range. The average cash payment is the same as the average check payment — approximately $246 at large multiple entity healthcare facilities but considerably less at physician offices and clinics.

The steady cash portion of payments can be tied to the following trends in the healthcare industry:

• An increase in the number of individuals whose economic life is cash based;
• An increase in the number of companies that bypass their insurance providers and directly pay for their employees’ healthcare needs;
• An increase in the use of health savings accounts among consumers; and,
• The desire among healthcare providers to receive payment prior to treatment or service.

If a hospital or healthcare system laments the lack of a cash receipts audit trail, or engages in accusations and finger pointing due to lost revenue, then it might be time to consider implementing tighter point-of-purchase controls.

Cash and electronic check and credit card payments are easier to manage if healthcare providers adopt a financial institution mindset. This mindset should focus on adopting a bank teller mentality about cash procedures, implementing bank-like automated payment processes and creating secure areas to store cash.

Bank Teller Mentality
The typical financial institution has one cash drawer per teller. At the end of each shift, tellers reconcile their drawers to find out if they are over or short to the amount of their receipts. The cash drawer contents are then transferred to the vault in a process that is known as a “sell.” The next time cash needs to populate a cash drawer, the teller does a “buy” from the vault.

Healthcare providers, on the other hand, take a more casual approach to payments. Emergency departments, Admitting and other departments generally accept cash, check and credit card payments. They may also accept money orders, traveler checks and internal payment “currency” such as tokens, tickets, stamps, gift certificates and payroll deductions because they do not have enough volume to warrant expensive cash registers. Two or three staff members might share a common cash box or drawer that might be reconciled a few times a week. The receipts get itemized onto a spreadsheet in order to make deposits, and frequently there is no intervening vault process to aid in the control of cash.

When comparing the two scenarios, it is easy to notice the areas in hospitals and healthcare systems where errors and problems could occur. A University of Iowa training presentation identifies the principles of good cash handling as segregation of duties, security, documentation, reconciliation and management review, all of which is missing from the healthcare example.

Healthcare providers need to embrace the individual accountability found in financial institutions in order to avoid the risks of cash becoming lost, stolen or misapplied.

Automating Processes
Automation has been a driving force in financial institutions for decades. A healthcare provider that wants to automate its point-of-sale process should look for a technology system that meets the following requirements:

• Captures and applies cash, check, credit card payments and payroll deductions to accounts across the healthcare system;
• Reconciles cash boxes or drawers and enters overages or shortages into the general ledger system at the individual level;
• Prepares bank deposits for single departments or a group of departments at any time;
• Creates settlement reports; and,
• Automates adjustments and corrections process.

Giving patients and their guarantors the ability to make a payment at any location eases some of the frustrations of the medical billing process. The point-of-sale system can access account information thorough the healthcare system so that the payment is applied to the correct account no matter where it will ultimately post.

In addition to handling cash payments and accepting electronic credit card payments, these systems can convert check payments into electronic payments. With a few exceptions, customers wanting to pay by check have their check payments scanned, have their checks voided by cashiers and sign a receipt authorizing the electronic payment. Benefits of electronic payments include better availability of funds and an easier reconciliation process.

A complete point-of-sale system has to serve everyone involved in the payment process, including the managers who need to review activity to spot problems and to verify that procedures are being followed.

Point-of-sale systems create both paper and electronic receipts for every transaction that occurs, making it much easier to reconcile cash drawers and create deposit slips. The ideal system integrates with other systems, such as general ledger or patient accounts, so that data does not need to be re-keyed.

The system must also include thorough reporting. It should be able to create ad hoc reports, downloadable spreadsheets, daily settlement reports and audit trails of all transactions. One large healthcare system using a point-of-sale system produces 13,000 reports per day — one for each teller, department, entity, payment type and exception type, so that managers who need to see their unique view of transactions have reports that suit them. These are electronically archived to avoid the dilemma of report distribution.

One of the easiest ways to increase customer satisfaction is to automate the adjustment and correction of transactions. Compared to weeks of waiting for a refund check, receiving an immediate refund at an automated point-of-purchase location is quite popular with consumers.

Security of Payments
Although financial institutions would never consider having desk drawers serve as vaults for centralized cash storage, the arrangement fits the needs of healthcare providers. That does not, however, mean that security measures should be overlooked.

Physical security of payments is also a major concern. All collected cash and the institution’s copy of receipts should be kept in a safe, one that is bolted to the floor but located near point-of-purchase sites, until deposited. Access should be restricted to trusted personnel only. Ideally, the safe is easily accessible by employees but is hidden from public view.

Healthcare providers understand the need for enhancing cash management processes based on the growth of patient payments for healthcare services. By adopting a teller mentality, automating the payment process and securing cash onsite, they will be poised to handle increasing self-pay payments in the future.

Douglas Braun is the president and CEO of Toledo, Ohio-based Internet Payment Exchange, Inc. (IPayX), a provider of electronic billing and payment (EBP) technology solutions to healthcare providers, utility companies, municipal governments and other organizations. Click here for more information.

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