Healthcare Receivables Experts Examine the Healthcare Marketplace

Healthcare receivables. For 2014, this could be the Next Big Opportunity for the accounts receivable management industry – especially considering the state of healthcare financial management and the compelling business challenges healthcare leaders must face.

insideARM.com had an opportunity to talk with both Kevin Vernon-Harris, Consulting Director, Experian Health; and Astrid Blackmon, Senior Vice President of Operations, USCB America Inc. Vernon-Harris and Blackmon will be panelists on an upcoming Ontario Systems healthcare-focused webinar, and their insight into the variety of opportunities and risks in this particular market will make for a can’t-miss afternoon’s discussion.

[REGISTER NOW for Ontario System’s free webinar discussing this topic: https://www1.gotomeeting.com/register/121953976]

insideARM.com: What are the new market conditions that are creating opportunity for ARM companies that pursue active healthcare debt?

Astrid Blackmon: We are seeing an increase in managed care population because of the Affordable Care Act (ACA), which lends itself to a lot of opportunities in EBO (extended business office) strategies. I’m seeing that as a very interesting new opportunity for businesses in this vertical.

There’s also a renewed focus on bad debt. We’re seeing a drop in bad debt assignments from public hospitals both in account referrals and balances, because of the increase in the managed care classification. In short, more patients now have insurance due to the ACA. In the past, those same patients were seen at a public hospital had higher account balances, and the higher the balance the less likely the collection. The stressors are enormous: high balances, no jobs, and some of clients are not authorizing litigation. These debts are harder to collect. Now the opportunity for bad debt collections is greater because balances under $5k are more likely to collect.

Kevin Vernon-Harris: When you take into consideration that most of the insurance plans through the ACA come with extremely high deductibles, this puts more of the financial burden on the patient and for the provider to collect. I also see that many employers that once offered healthcare coverage for their employees are now eliminating this, causing employees to be uninsured and/or redirected into an ACA plan.

The question for healthcare providers is: how do they take care of those bad-debt costs? And, like Astrid mentioned, working with an EBO is becoming a more attractive option for those providers. It reduces the risk in managing all of that inventory. It doesn’t require the organization to hire more and more people.

Blackmon: A managed solution via an EBO can mean more income for the provider.

iA: Can you share any statistics or data that characterize the market opportunity?

Blackmon: We actually just did a review of the accounts being assigned, because I’m seeing a shift. What I’m seeing is that our bad debt referrals from our public health clients have dropped about 30 percent. I project it will grow to 50 percent. Early-out inventory is dropping by 50 percent – and that will ultimately affect bad debt referrals.

It can actually be a benefit because you know it will turn into a managed care account, hopefully with an objective to collect a lower deductible balance being referred.

iA: How do today’s early-out programs differ from classic charged off debt programs?

Blackmon: There’s absolutely more opportunity for better patient contact and communication.  I’m also seeing increased opportunity for settlements before those accounts are sold or referred to Bad Debt. There is more focus on a customer service approach that is less invasive than a collection approach. However, that comes with lower rates as a vendor providing these services in order to stay competitive.

Vernon-Harris: Hospitals are becoming better educated on the different options available to them. The patient experience is one of the key objectives in today’s competitive environment. Healthcare providers are choosing to look into EBOs where they can maintain control of their accounts. They’re looking for EBOs that blend seamlessly with their organization, providing a transparent experience to the patient.

iA: What are some of the core competences an EBO should develop as they consider these programs?

Vernon-Harris: From a facility standpoint, someone that can be very transparent and easily conform to the processes and procedures of a facility is critical. For example, what is the correct customer service philosophy when dealing with patients? How are you identifying insured vs. uninsured? Being able to act as a “Partner” vs. a “Vendor,” in my opinion, is a key to success.

Blackmon: I believe first and foremost, that the key competency is to become flexible and open to ideas and opportunities. If you are in a certain pocket of business, you tend to specialize in that. But in order to be an effective EBO for your healthcare partner, you’ll need to expand some services. You have to be willing to learn so you can better partner with your clients.

We’re seeing an environment of a one-stop shop. Not a little portion – a holistic shift, so to speak. We are hearing and being very receptive to our clients. We want to partner with them. They trust us. If you already have a client and you understand their inventory pressure points, you have a leg up.

As the service offerings become more and more complex, the need for nimble technology, and integrated solutions, is also going to become a key differentiator. The fact that fewer vendors provide a more integrated, less moving parts, lower cost, easier-to-share data solution is going to hurt those vendors that don’t diversity in the long run.

Finally, to stay competitive we offer early out and Bad Debt collection services with a blended rate. Our clients do not need to worry about whether they’re going to work the balance upfront or backend, and so you have opportunity to do both.

iA: What technology and process improvements should you consider to ensure sustained margins?

Vernon-Harris: Accurate data and analytics are critical to understanding your patient population and overall accounts receivable. You should be able to identify those patients who should not go through the collection process, e.g., Medicaid, presumptive charity, etc. Once you identify patients you can put through the self-pay cycle, you want to make sure you work those accounts in the most efficient way possible. You don’t want to put patients who are likely to pay on time put through the same collection process as those who may not. Scoring and segmenting your accounts with data and analytics will allow you increase collections while reducing your cost to collect. 

Blackmon: Scoring. Propensity to pay. Pursue patients who have ability. Telephone scrubbing. Stop wasting your talents and your efforts on accounts that are going to go nowhere. I feel that those elements also have to have a strategy of how many times you’ll purse patient before you give up.