Hospital Bad Debt: How to Alleviate Some of the Pressure
By Linda Albery, Senior Vice President
Large hospital operators HCA, Tenet and Community Health Systems recently issued robust earnings, revenues and large declines in uncompensated care costs, a key measure of expenses. These statements from some of the country’s largest for-profit health systems has some in the industry trumpeting the end to hospital bad debt.
Yes, the ACA is succeeding in moving many people from the ranks of the uninsured to the ranks of the insured, and that translates into fewer charity cases. But an end to bad debt? Not by a long shot.
While the ACA is helping to reduce debt associated with charity volume, the increase in consumer liability and inability to meet the financial obligation through high deductible plans is creating underinsured patients. What we’ve achieved is exchanging charity-related write-offs for write-offs for insured patient bad debt.
Given that more than 50 percent of insured patients are not paying their portion of health care bills, hospitals will soon base their financial survival on their ability to prevent owed dollars from becoming bad debt.
Although there may not be a silver bullet for easing the strain of bad debt, there are action plans that hospitals, clinics, and physician practices can implement that will – over time – reduce the financial and resource burdens. We believe the foundation of any strategy for improving patient payment collection requires creating an efficient, easily repeatable process which emphasizes patient education pre- and post-service and reduces the revenue gap through achievable improvements in core clinical and functional areas.
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