Hurting financially? Save the day with front-end revenue increases

New business paradigm needed

Today's hospitals are facing an unprecedented revenue challenge, due to surges in uninsured patients and skyrocketing out-of-pocket responsibilities for the insured. In this challenging new fiscal environment, patient access will play a starring role.

"The current economic environment has played a major role in increasing bad debt and shrinking net patient revenues," says John E. Kivimaki, director of patient accounts at Mary Rutan Hospital in Bellefontaine, OH.

"Sixty percent of bad debt is generated from insured patients," notes Kivimaki. "This is a problem that will increase as patient responsibility continues to rise, and as 30 million U.S. citizens become insured under health care reform."

Kivimaki says that both Mary Rutan Hospital and the health care industry as a whole must shift the revenue cycle from the back end to the front end. "Making this shift provides more funding for medical research, recruiting efforts, and improves overall quality of care," he says.

In the past, the primary payers in the health care industry were either private or public insurance organizations. Health care providers' systems were built specifically to bill and accept payments from these payers.

"Any patient responsibility not captured was either written off as bad debt, or pushed to 'early out' and other collection efforts," says Kivimaki. "Every dollar pushed to the back end of the revenue cycle is reduced to 16 cents on average, if collected at all. The value of our 'health care dollar' gets reduced as the patient's account ages through the revenue cycle."

To improve revenue by reducing claims denials, schedulers and registrars at Pennsylvania Hospital, part of the University of Pennsylvania Health System, perform a great deal of preparation before the day of service.

For instance, if a radiology study needs to be scheduled, the schedulers check the various systems depending on the patient's insurance. They confirm that the patient is eligible and learn whether a referral or authorization is required.

"This is very important, since some radiology studies are high-ticket items," says Debra A. Artwell, manager of outpatient access. "At this point, the scheduler is able to advise the patient, and/or physician office, what is needed in order for the patient to have the study."

Mary Rutan's patient access department found itself ill-equipped to adapt to the changing environment, with rising patient responsibilities including higher copays, deductibles, and co-insurance, says Kivimaki. Its systems and processes were geared toward billing the insurance provider or government programs, not collecting from individual patients.

"It is predicted that 30% of hospital revenues will come directly from patients by 2012," says Kivimaki. "Health care has gone retail, and we must adapt to this new business paradigm."

Patient access leaders at William Beaumont Hospital in Royal Oak, MI, have been asked to look for ways to improve quality and point-of-service collections to support the hospital's revenue cycle objectives.

"And, of course, we need to do it with as little cost possible!" says Cheryl Webster, director of patient registration services. The department increased cash collections by 25% over the previous year. Here are the steps they took to increase front-end collections:

1. The department added a link to the patient's self-pay amount to its registration screens.

"Staff can quickly identify the amount owed," says Webster.

Investments in patient estimation software for the front end may not be possible in a tough economy, though, despite the fact that it's the very time it's needed most. Instead, patient access departments like Webster's are being asked to make do with what they already have.

Fortunately, it is sometimes possible to unearth savings by tweaking existing systems and processes. "We worked with our IT department to determine what we could do to improve the system we have already," says Webster. "We pulled information from the billing section to the registration screens. After a trial-and-error period, we have something that is not perfect. But we are getting there."

2. Registrars now ask about outstanding balances at every registration encounter.

"We are working on a report to list all of the patients with an outstanding balance who are on the schedule for the next business day, to help us better prepare," says Webster.

3. Managers are implementing a process to allow registrars to work with patients to establish payment plans.

"In the past, this task was handled by the billing staff, but we want to help get our patients on their way to making payments and settling their out-of-pocket responsibilities," says Webster. Registrars will initiate the process whenever patients say they cannot pay off their balance.

"We are continuing to develop the payment plan process," says Webster. "We are rolling it out with a paper system. Then, hopefully, we will move to something a little more streamlined."

4. Staff received extra training to help them feel more comfortable asking patients to pay for their outstanding balances at the time of registration.

When talking with staff about their concerns, Webster often heard that their own personal financial situation was worrisome. Thus, staff didn't feel comfortable asking a patient to make a payment that they could not make themselves. "The Michigan economy has suffered. Many of us have family members who are out of work," says Webster. "It is easy to empathize with our patients, especially those with large balances."

5. Two staff members were chosen to help with training on collections.

The management team talked to staff and reviewed collection results. They identified two registrars who were very successful in collecting payments, while being very kind and service-oriented. "We looked for staff with high collection success and no patient complaints," says Webster.

The two registrars worked with supervisors to prepare a training guide. "Then we asked the staff to sit with their peers throughout the department to help role-play and share their tips for service-oriented cash collection," says Webster. "We are still working on training, and tools and processes. But we are very pleased with the results so far."

[For more information, contact:

Debra A. Artwell, Manager of Outpatient Access, Pennsylvania Hospital/University of Pennsylvania Health System, 800 Spruce Street, Philadelphia, PA 19107. E-mail:

John E. Kivimaki, Director, Patient Accounts, Mary Rutan Hospital, 205 Palmer Ave.,Bellefontaine, OH 43311. Phone: (937) 592-4015, Ext. 5616. Fax: (937) 599-2143. E-mail:

Cheryl Webster, Director, Patient Registration Services, William Beaumont Hospital, Royal Oak Michigan. Phone: (248) 898-0860. E-mail:]