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Financial Information Systems The perfect storm

How key market drivers, self-pay and healthcare IT are advancing a healthcare receivables business model shift.

By Anne Brown T

oday, more than ever, healthcare providers across the board are experiencing a minimum 10 percent rise in their self-pay accounts, ac- cumulating more than 20 percent of overall accounts receivable. Historically, this rise has been fairly gradual and expected. Unlike before, however, there are more impactful forces in the market contributing to this phenomenon. Within the next four years, self-pay patient liability will be one of the leading receivables in healthcare. So what are some of the critical market driv- ers that are catapulting self-pay to the forefront? Among the provisions of

Anne Brown is director, product marketing, Ontario Systems, LLC. For more information on Ontario Systems solutions:

the Affordable Care Act, most notable is that more than 31 million Americans will become insured in 2014 and must obtain insurance. Within the act, each of the

four plans has a high deductible. Employers will be re- quired to provide health coverage to employees or incur a fi ne of up to $3,000 per employee per annum. As healthcare coverage costs continue to climb, employers are eager to share costs with employees, perpetuating the increase of patients with Consumer Directed High Deductible Plans. Factor these trends with the current anemic economic conditions and the result is a formi- dable climate where providers will experience a rise in self-pay receivables.

Many healthcare providers today are forced to focus more on events requiring signifi cant capital expenditures, such as healthcare reform, EHR and ICD-10, than they are on self-pay receivables. At the same time, hospitals see their self-pay and bad debt increase to unsustainable levels, impacting the ability to pay for these initiatives. In 2009, more than 95 percent of hospitals expe- rienced an increase in self-pay receivables, and CEOs interviewed by Ontario Systems state that the primary complaint received from patients is their bill and under- standing their accountability after insurance. Hospitals need to explain ongoing changes and equip their patient account representatives with information that is mean- ingful to the patient.

Strategies among hospitals vary – some are turning to outsourcing while others are bringing self-pay accounts

22 September 2010

back in-house. The majority is currently retaining its self-pay accounts and looking to help recoup revenues, reduce costs and stabilize cash fl ow, while safeguarding crucial patient relationships throughout the process. These prevalent market forces have not only disturbed complacency among healthcare providers, but also among healthcare IT (HCIT). As technology needs of provid- ers increase in complexity, HCIT vendors are working diligently to update existing legacy systems and inorgani- cally expand their product offerings, predominately in clinical and EMR solutions. While these solutions address providers’ needs, they don’t go far enough in addressing self-pay receivable challenges, such as information fl ow to patient account representatives, so they can effectively communicate with patients and ensure appropriate treat- ment strategies to promote collection success.

In 2009, more than 95 percent of hospitals experienced an increase in self-pay receivables.

Market forces and the direction of larger HCIT ven- dors are fueling the emergence of more specialized niche- IT organizations that offer agile and scalable solutions that directly address self-pay receivable concerns. These organizations achieved their state-of-the-art solutions by partnering with key industry innovators in offering the latest technology in hosted, Web-enabled solutions that easily interface to legacy and patient fi nancial systems. They are at the forefront in providing more affordable and in-depth self-pay receivable solutions that provide the right method for collection with the right data at the right time while clearly identifying the costs to collect. In retrospect, it can be argued that healthcare pro- viders and healthcare IT organizations have weathered many storms. There have always been regulatory and governmental impacts, key economic drivers. But when considering the extremity of these key market drivers, the diversity of regulatory events and the abundance of technologies available, this scenario is the perfect storm.


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