Health Care Providers Experience Conservative Bad Debt Recoveries

Health care and finance leaders  surveyed on the state of bad debt today say it’s influenced more by insurance reform than patient
delinquency leading everyone to agreethat there is room for improvement in revenue cycle management (RCM)processes.

A survey conducted by Baltimore based health care research firm Sage Growth Partners found that 59 percent of 100 respondents believe insurance reform, including higher copays for patients, “is to blame” for bad debt, especially those representing smaller hospitals. The study was conducted on behalf of health care technology company Dorado Systems.

Meanwhile, 17 percent of respondents said patient delinquency is the cause of bad debt, while others said causes include “ineffective facility specific
RCM processes (11 percent), industrywide RCM complexities andregulations (10 percent), changes in reimbursement models (2 percent), and a high poverty rate (1 percent),” according to a news release from Sage Growth Partners.

Of the 11 percent of respondents citing internal RCM procedures as the main cause of bad debt, a significant
majority (81 percent) were at the executive level, including CEOs, CFOs and COOs, it states.

Among leaders at smaller hospitals responding to the survey, 75 percent at hospitals with 50 to 100 beds and 68 percent at hospitals with less than 50 beds cite
insurance reform as the cause for bad debt. “Bad debt is an industrywide issue that has only grown increasingly more challenging in the last five years,” Dan D’Orazio, CEO of Sage Growth Partners, said in the news release. “While external factors like insurance reform have compounded the problem, it’s important for leaders to talk about this issue strategically with their teams, and to remember that there are steps they
can take to mitigate bad debt.”

When it comes to collecting bad debt, 50 percent of survey respondents predict they can recover up to 10 percent from a payer or a patient, meaning many
face significant write-offs.

Thirty-six percent of respondents say their bad debt is higher than $10 million, 20 percent say it’s between $10-$30 million and 10 percent report bad debt
between $30 and $50 million, according to the survey.

While many health care organizations face bad debt, the survey shows one in five have no third-party partner or established internal procedure to recover
the dollars.

Additional key findings in the survey include:

  • Twenty-one percent of respondents say they are using neither an internal process nor a third-party vendor.
  • More than a third (36 percent) work with a third-party vendor for bad debt recoveries and 25 percent established an internal process while 18 percent do both.
  • A majority, 82 percent, of respondents, say they check their patients’ eligibility for insurance, 18 percent do not.
  • And, of those who do not check patients’ eligibility, 28 percent do not have an internal process or third-party vendor established for bad debt recovery.

Read more on the Sage Growth Partners here:

Source: ACA International Pulse Newsletter – August 2018 – Vol. 34 No. 8