Use upfront collections to help hospital and patients

Proactive collections and compassion not mutually exclusive

The main reasons Susan Baxley, corporate admitting manager, wanted to work for Adventist Health were because of its mission statement "to share God’s love by providing physical, mental, and spiritual healing," and because of its desire to implement best practice registration. She joined the Sacramento, CA-based health system, which oversees 20 hospitals in California, Washington, Oregon, and Hawaii in November 2001 after a lengthy tenure with a national hospital chain.

Coming from a "pro-collection background," Baxley adds, she was struck by the fact that Adventist was not tracking and trending registration statistics, particularly over-the-counter cash collections, and was not soliciting payment at the time of service. The mindset was, "We’ll just send a bill from the business office — we’re a not-for-profit company," she explains.

Experience taught her, however, that compassionate customer service and a proactive collections policy were not mutually exclusive, Baxley notes. "I knew the [positive] effect of communicating with patients about what is owed. Insurance and Medicare are so complicated the average person has difficulty understanding what is covered and what is not covered."

Baxley once read that a national survey revealed that 75% of patients who left their health care providers did so because "they were surprised or upset about the bill," she notes. "Nobody said anything to them up front, they didn’t understand their [insurance] coverage, and they were upset about this large bill arriving."

"I believe part of customer service is helping patients work through this," Baxley adds. "Financial expertise and compassionate understanding are needed. Financial counseling is the cornerstone of good customer service."

That philosophy — along with some focused training on the how and why of upfront collections — has helped boost over-the-counter cash totals for Adventist’s 20 hospitals from $2.6 million in 2001 to $10.5 million in 2002 to $16 million in 2003, she says. (See Over-the-Counter graph.) By mid-May, Baxley adds, the system was on track to collect about $20 million in 2004. "We hit a [monthly] high in April of $1.8 million." The success, she emphasizes, was very much a team effort. "I’m so proud of every single one of the registration managers. This is their accomplishment. I’ve simply been the cheerleader."

Hiring Baxley was part of a strategy to bring oversight for patient financial services (PFS) and admitting to Adventist Health’s corporate office, according to Jim Brewster, the health system’s vice president of finance. "For about 10 years, we didn’t have a presence in patient financial services in the corporate offices," Brewster says. "About three years ago, we added staff to assist hospitals in the operation of their PFS offices." In addition to Baxley, he notes, there now is a PFS director at the corporate level, as well as a regional business office manager.

What began as a focus on best practices in admitting — ranging from obtaining good demographics to providing excellent customer service — extended into "add-on pieces" that included a hard look at over-the-counter cash collections, Brewster explains. "Our board is extraordinarily pleased with what is happening," he says, noting that, among other improvements, days in accounts receivable have come down steadily over the past 2½ years and there has been a positive impact on bad debt.

Despite tough economic times, "we haven’t seen the kind of rise [in bad debt] that others have seen over the past couple of years," Brewster points out. "In a number of our hospitals, there has been a reduction in what had to be put aside for bad debt and as a system, we have leveled off."

Learn what and how to collect

When she first started doing assessments of the different facilities, Baxley says, she realized that cash collections was not a focus, and she knew from working with hospital registration employees all over the country that at least one of the following reasons applied:

1. Registrars don’t know what to collect.

"Maybe they don’t have the right tools, like eligibility systems, or maybe they just don’t understand insurance coverage."

2. Registrars don’t know how to collect.

"I’ve found registration staff that feel very comfortable asking for an emergency contact, a diagnosis, a Social Security number, and other personal information, but when it came to asking for money, they became very nervous."

3. Registrars just don’t believe in it.

"Maybe they think [asking for money] is poor customer service or that it isn’t their job, it’s the business office’s job."

With those potential challenges in mind, Baxley says, she "started off with making sure they knew what to collect." She taught classes, and worked with admitting managers on Medicare, MediCal (California’s version of Medicaid) and other forms of coverage. Adventist installed the HDX integrated eligibility system, so registrars can confirm that a patient still has the insurance that is listed and determine the copay or deductible, she adds. "If [the insurer] is MediCal, there is month-to-month eligibility, so maybe the patient needs to be [classified as] private pay. "I also made sure access personnel knew how to check insurance via the Internet using payer-specific web sites," Baxley says.

The class on collection skills included not only the "what to collect" and "how to collect" parts of the equation, she adds, but also focused on helping registrars realize that proactive cash collection "is a good thing." Baxley pointed out to her staff that the practice is in line with Adventist’s mission statement. "We want to be good financial stewards," she says. "If we can collect from those who can afford to pay, then we can provide charity care for those who can’t afford to pay."

"The shift in the paradigm," Baxley adds, "was that in the past, Adventist had just sent a bill, and if the patient complained, or said she or he couldn’t afford to pay, [the health system] tried to get them on Medicaid, but it was often too late, so the bill ended up being written off to bad debt."

Work together with the patient

In training registrars, Baxley uses an analogy of taking a car to a mechanic who works on it and then says, "Don’t worry about it — I’ll just send a bill later." Later, the person gets a bill for $3,000 and "feels really ripped off," she adds. "And we wonder why patients are upset with big bills from the business office." It will be much better, Baxley suggests, if the mechanic tells the customer up front there are many problems with the car. The cost will be $3,000, but there are several payment options available, including a loan program. In that case, she says, "The person feels the mechanic is saying, Let’s work on this together.’"

Registration staff have been "pleasantly surprised" to discover that this scenario applies to patients as well as car owners, Baxley says. At one Adventist hospital, she notes, "customer service scores improved dramatically" after employees began discussing payment options with patients. In the class on collection skills, Baxley adds, she works with staff on how to approach the patient in a customer-friendly manner, and leads employees in some role-playing. "Any time you speak with a patient, it’s like an interview. You can’t help them unless you get them to communicate."

"I tell [registrars] never to ask a yes’ or no’ question," she says. "You don’t say, Can you pay for that today,’ but rather, How would you like to take care of that?’ "Then, if the patient says, I don’t have any money,’ you’re able to draw the patient out, work with them."

Baxley says she stresses the following concepts when working with registrars:

Believe in yourself.

This has to do with "making sure you have the right attitude when you approach the patient," she explains. "You need to be sure you know what you are talking about. If you don’t understand the estimated charges, the patient feels uncomfortable."

Communicate in a clear, concise way that leaves no doubt money is owed.

"[Registrars] need to be able to gauge the patient’s reaction to what they are saying — all this terminology that the average patient may not know," Baxley notes.

Act as a patient advocate.

Offer solutions that work for the hospital and the patient, she adds. "We’re there to help them work through this process." Offer all the options available, Baxley says, and if they don’t work, look for other ways to get reimbursement.

Competitive spirit emerges

Every month, Baxley says, she receives an admitting data quality indicator from the registration manager at each of Adventist’s 20 hospitals. From that report, she extrapolates the following data and trends it on a spreadsheet. (See Over-the-Counter Cash Collections excerpt.)

1. Pre-registration totals
2. Percentage of scheduled cases that are pre-registered
3. Number and dollar amounts of registration-related denials
4. Over-the-counter cash collections
5. Compliance with regulatory requirements.

The data are sent to all Adventist Health registration managers, patient financial services directors, chief financial officers, chief executive officers, and other regional and corporate financial administrators, Baxley reports. Although it wasn’t her intent, she notes, the report has sparked some competition among the registration staffs at the various facilities

Because the hospitals are so different — running the gamut in number of beds and predominant payer type, among other measures — Baxley sets collection expectations using a standard that levels the playing field, she points out. "It’s not fair to compare a DSH [disproportionate share hospital], which won’t bring in as much cash, to a hospital with more payers."

"I looked at industry standards and found that it was considered best practice if registration departments (that includes inpatient, outpatient and emergency department) can bring in 2% of what is collected by the business office," Baxley says. "We compare percentage to percentage. Then you know where the true target is."

"All of our facilities have dramatically improved," she adds. "We’ve had one at 3.59% in March and another hit 5.08%. On average, 2% is what they should bring in."

In addition to the benefit of getting money sooner rather than later, there is another financial plus to upfront collections, Baxley points out. "There are a lot of costs associated with sending out a bill," she says. "There is postage, computer time, stationery, and the soft costs — people spend hours posting, reposting, telephoning patients, and documenting. The American Collectors Association estimates it costs $6 to $8 to rebill one statement." That means that for a hospital rebilling 1,000 patients for 90 days in two-week billing cycle, Baxley continues, billing costs alone would equal between $36,000 and $48,000.

Proactive cash collection is "good for the hospital, good for the patient, and good customer service," she adds. "It’s about being good stewards of resources."

[Editor’s note: Susan Baxley can be reached at (916) 774-3372 or]