Wichita Hospitals Beefs Up Financial Counseling to Curb Bad Debt Expense

Like many hospitals, Via Christi Regional Medical Center has seen its uninsured and underinsured patient population increase significantly over the last two years. Instead of seeking more help to collect its self-pay receivables, the Wichita, Kan. not-for-profit hospital decided to take a different approach to curb its bad debt expense. 

Two years ago Via Christi pulled its financial counseling services back in-house and added staff and other resources to help it qualify patients for charity care and government assistance programs.

“We created a financial counseling department,” said Dan Angel, director of patient financial services at for three Via Christi facilities and a rehabilitation center for the Wichita Health Network. “We invested in technology that would help us in screening all of our uninsured patients for public benefits.”

Angel said Via Christi’s uninsured and underinsured population has increase nearly 10 percent since the beginning of 2007.  Other hospitals reported similar increases, said Rod Bazzani, executive vice president of health care for TransUnion, a Chicago-based credit and information management company.

Bazzani said nearly half of the receivables managers at the 125 hospitals that use its healthcare analytics software reported a six to 10 percent increase in their uninsured and underinsured patient population since the beginning of 2007.  Another 28 percent of the respondents said that their uninsured and underinsured population has grown 11 percent to 20 percent. 

He said the surge in uninsured patients has pushed the bad debt expense for those hospitals to an average of 7 to 10 percent of net revenue.

“Normally, the percentage is the four to five percent range, maybe six percent,” Bazzani said.

Industry experts expect hospitals to continue to outsource much of their self-pay accounts from underinsured patients with outstanding bills from unpaid co-pays and deductibles.  However, some experts predict more hospitals will adopt the strategy Via Christi employed to stem bad debt expenses and satisfy new Internal Revenue Service rules that require not-for-profit hospitals to document their charity care and uncompensated care expenses to retain their tax-exempt status (“Hospitals Expanding Charity Care Guidelines to Ensure Tax-Exempt Status,” March 11).

Angel said he believes bolstering Via Christi’s financial services department was the right approach for the hospital and its patients.  He estimates that Via Christi accumulates $12 million in monthly charges related to treating uninsured patients. 

Bolstering efforts to help those patients get financial assistance has put more pressure on the hospital’s charity care programs. But Angel said that’s a good thing.  The hospital can better fulfill its mission of treating the underserved, and with more patients enrolled in government medical and financial assistance programs, the hospital receives more of its money sooner.  Additionally, with previously uninsured patients enrolled in government programs, consumers will have coverage the next time they seek medical help.

“In the past, where we may not have had to tools and resources, (those charges) would go to bad debt write offs or collections,” said Angel.