The effects of the novel coronavirus (COVID-19) on global health, economies and societies have been well documented and are nothing short of staggering. Millions of Americans face uncertain financial futures, which in turn creates uncertainty for organizations to whom consumers owe money. In a survey conducted by TransUnion in early May, 59 percent of Americans said COVID-19 negatively impacted their household incomes, and 66 percent said they’re worried about paying current bills and/or loans. Loans in financial hardship status, which is indicated by a deferred payment, frozen account or frozen past due payment, rose significantly in the past year. Auto and personal loans in this category increased from .51 percent and .3 percent, respectively, in April 2019, to more than 3.5 percent in April 2020. Five percent of mortgages are in financial hardship, compared to .48 percent a year ago.
Even as communities ease restrictions and businesses reopen, the U.S. Bureau of Labor Statistics reported that unemployment in the U.S. stood at 13.3 percent in May. Research funded by the Robert Wood Johnson Foundation and the Urban Institute suggests that number could go as high as 20 percent in coming months, causing up to 43 million people to lose their employer-sponsored health insurance. While some will enroll in Medicaid or obtain Marketplace coverage, others will become uninsured. The fallout from people either having no insurance or lacking the money to cover high deductibles and copays presents daunting financial challenges for hospitals and healthcare providers.
Flexible payment solutions are essential to recovery
Hospitals—many surviving on slim operating margins even before the pandemic—saw margins fall 282 percent year-over-year through May, according to Kaufman Hall. While the path to normalcy and financial recovery is still unclear, hospitals must take whatever steps they can now to regain control of their balance sheets and cash flow. Increasing patient collections is a vital component.
Almost half of surveyed consumers whose incomes have been negatively affected said they’ve contacted the companies where they have accounts to inquire about payment options. As people juggle limited financial resources, businesses that are flexible and offer multiple payment solutions are naturally more likely to get paid. For hospitals, sound collections strategies incorporate three key actions:
- Communicate clearly and with compassion
Fear and anxiety have run rampant during the pandemic, often stoked by misinformation and changing guidance. Patients are likely to be more stressed than usual, especially when discussing financial obligations. Hospitals should provide training, tools and conversation guides to registration staff to help them communicate information accurately and show care and compassion as they counsel patients throughout the financial experience.
- Determine patients’ propensity to pay
Every patient’s financial circumstances are different and may not be discernible through conversation alone. Data-driven tools to identify factors such as payment history, credit standing and residual income can provide a more reliable picture of where patients stand on the ability to pay spectrum, leading to higher cash collections and reduced bad debt.
- Offer personalized solutions
Utility companies, mortgage companies, insurers, landlords and many others are altering their payment requirements to give relief to people facing financial difficulties. Hospitals can do the same by understanding each patient’s situation, identifying payment barriers and finding the most appropriate payment plan. Personalized payment plans can significantly improve front-end and ongoing cash collections and create a positive patient experience to cement loyalty long after the pandemic is over.
- Connect patients to public benefits
The importance of patient advocacy continues to grow as more patients find themselves unemployed and in need of public assistance. To support uninsured patients’ in coping with financial challenges, hospitals should incorporate financial advocacy into their revenue cycle operations and take advantage of an additional revenue source with little to no upfront hospital costs associated.
As the fight against COVID-19 and its repercussions continues, hospitals must work quickly to optimize productivity, revenue and patient satisfaction. A personalized approach to payment solutions, which is essential to meeting hospital revenue goals in the best of times, is especially critical now.