Boost Your Healthcare Revenue by 36% with Strategic Early Out Collections

June 11, 2024 | Mark Craig, CEO
Strategic Early Out Collections

According to research from HFMA, increasing revenue is the number one priority for healthcare organizations nationwide, followed closely by improving the patient experience and reducing costs. 

Fortunately, a strong early out strategy addresses all of these priorities. And in our experience, it often starts generating ROI within just a couple of weeks after implementation—a quick and ongoing influx of cash that can be game-changing for organizations of all sizes.

However, devising a comprehensive early out strategy that truly moves the needle can be challenging, especially for busy revenue cycle managers already juggling multiple priorities.

In this article, I’ll walk you through the proactive approach we take to boost our clients’ revenue by an average of 36%.

These insights include actionable steps you can take right away to refine your early out collection strategies, as well as more complex implementations that refine and automate your collections.

Common Challenges in Early Out Collections

In many cases, healthcare organizations are already starting behind the eight ball in their early-out efforts. This isn’t their fault, as it’s exceptionally tricky to balance an effective early-out program with the long list of other responsibilities in a busy medical setting.

On top of that, the rapid changes in technology and compliance requirements can make it difficult to consistently remain efficient.

If you recognize any of the patient collection challenges below, you’re not alone, and you’re in the right place. Getting a handle on where you need improvement is the first step to designing a strategic early out program that works.

Effective Patient Communication

One of the primary challenges in early out collections is communicating effectively with patients. Many patients struggle to understand their medical bills, leading to confusion and frustration that results in delayed payments and increased patient dissatisfaction.

On top of that, patient outreach via various communication channels can be inconsistent and unpredictable, complicating the process further.

System Integration

Another significant hurdle is the integration of early out processes with existing healthcare information systems. Many organizations operate with disparate systems that do not communicate well with each other, leading to data inconsistencies and inefficiencies that slow down the collection process and create additional administrative burdens. 

Inadequate Technology

In addition to integration challenges, many providers lack the appropriate technology to support modern revenue cycle management. Outdated or inadequate systems hinder the efficiency of the collections process and can even impact patient interactions.

Without robust technology, it’s difficult to automate routine tasks, which naturally means increased administrative burdens and higher labor costs.

Leveraging advanced technologies like AI, data analytics, machine learning, and automation can significantly streamline the collections process; however, it can also feel like an overwhelming task to most busy offices.

Training and Staffing

Effective early out collection efforts require well-trained staff who can handle patient interactions sensitively and efficiently.

At the same time, training staff in a busy healthcare environment with high turnover rates can be difficult, to say the least. The Medical Group Management Association reports an average turnover rate of 20% for healthcare staff, disrupting workflow and increasing training demands​​.

Regulatory Compliance

Navigating the complex web of regulations regarding patient data, medical billing practices, and patient collections is another critical challenge. Regulations such as HIPAA and the Fair Debt Collection Practices Act change frequently to address new issues and improve patient protections. These changes can be rapid, requiring constant vigilance and updates to compliance protocols. 

Failure to adhere to regulations can lead to severe consequences, including hefty fines, legal action, and damage to the organization’s reputation. Non-compliance can also result in breaches of patient trust, further complicating collection efforts and impacting the overall financial health of the organization.

Patient Financial Hardship

Rising healthcare costs and high-deductible health plans have left many patients struggling to pay their bills, resulting in lower pay rates and higher levels of bad debt.

In fact, according to the Commonwealth Fund, 51% of working-age Americans struggle to afford their health care, a trend that seems likely to continue as payers gleefully deny more and more claims to enrich their own pockets. 

This dire situation means that the challenge for providers is twofold: They must navigate the complexities of collecting out-of-pocket payments from patients who are already financially stretched, while simultaneously managing the resulting cash flow issues within their own organizations.

Administrative Burden

The challenges listed above translate to a significant administrative burden on an already stretched-thin back office, as each issue demands substantial time and internal resources.

Combined, these challenges create a complex workload for staff, who are already busy with essential functions like billing, coding, and denial management.

Boost Your Revenue Cycle with a Strategic Early Out Program

It’s no wonder that many healthcare groups put their collection activities on the back burner and resign themselves to eventual write-offs. 

Truly, it doesn’t have to be this way. Even if you’re not in a position to adopt a full-scale early-out overhaul, there are several things you can do right now to start seeing improved revenue. 

I’ll discuss them below, in order of easiest to hardest to implement.

Reach Out for Payment at the 30-Day Mark

One of the easiest, cheapest, and most effective ways to quickly improve collections, increase revenue, and avoid bad debt is to start your collection efforts earlier in the revenue cycle.

Whenever possible, and especially for outpatient services, collect upfront. 

For any remaining balance you’ve billed the patient for, reach out as soon as the initial 30 days are up.

The sooner patients are reminded about their outstanding balances, the higher your chances of recovering payment. In fact, this one simple strategy has more than doubled monthly collections for many of our clients.

When you engage patients early in the process, the visit is still fresh in their mind, so they clearly remember the benefits of the service you provided. And really, most people do not want a bill to go delinquent. Perhaps the bill legitimately slipped their mind, and all it will take to receive payment is a simple call from your office. If the patient is in a financial position to make payment, they are likely to pay and simply be done with it.

You may already use a patient management or billing software in your organization; in addition to sending automated reminders to patients, you can set up alerts for office staff to reach out to patients once the 30 days are up.

Then your admin team can make a quick phone call, which is often more likely to get a response than an automated alert—even if the patient doesn’t answer the phone and only listens to your voicemail. Of course, you can also text and email to cover all bases.

For smaller practices with more basic technology in use, even something like Google calendar or Outlook can be used to track invoice deadlines and create calendar alerts for staff.

Offer Flexible Payment Plans

Offering payment plans has become a more prominent trend in recent years, with a 74% increase between 2018 and 2021 alone. This new development is driven by the increasing financial burden on today’s patients, due to high deductible health plans, an increasing number of early out self-pay patients, and rising out-of-pocket costs—as well as the need for healthcare providers to improve their revenue cycle management. 

It’s yet another instance of the payers benefiting while everyone else struggles. Until we change healthcare on a large scale, the only solution is to try to work with patients empathetically and collect what you can.

So, for patients with account balances too large to pay in one go, offering financial assistance in the form of flexible payment options is a compassionate and realistic solution, showing patients that you understand their financial struggles and are willing to help.

The development of flexible payment plans does take a little upfront work, along with the right technology. You can start by considering clear terms for your payment plans, including the duration, minimum amounts, and interest rates, if applicable. From there, you can set criteria for who qualifies for these plans, such as thresholds for outstanding balances or financial hardship criteria.

You’ll also need patient management software such as Athenahealth, NextGen Healthcare, or Kareo, which can automate billing cycles, customize plans, track payment schedules, and streamline patient accounts.

Additionally, make sure your EHR system includes an online payment portal where patients can view their bills and make convenient payment.

While it may sound like a lot of effort is involved in set-up, it’s definitely worth it in the long run. This is especially true when you consider that up to 20% of patients would switch to a provider offering flexibility, and 62% would use financing options if available. 

Focus on Empathetic Communication and Financial Counseling

Your patients didn’t ask to be sick or injured. And just like you, they didn’t ask to be at the mercy of a frustrating health care system controlled by lobbyists and greedy payers. As such, it’s important to demonstrate empathy and understanding, showing patients that we’re all in this together, and that you’re not the enemy. 

When we work with clients as an extended business office (EBO) for early out collection services, we use a finely-tuned script with proven neuropsychology strategies. Part of the script involves educating patients on their bills and responsibilities, as well as reminding them of the value of the provider’s services and the help the patient received. Altogether, this helps us connect with patients, build rapport, demonstrate understanding, and streamline patient communications. 

In our experience, developing these relationships with patients does make them more likely to pay their bills. Equally important, strong patient relationships contribute significantly to overall customer experience and patient care. 

Often, part of the discussion involves helping patients understand their financial obligation. According to a recent survey, 40% of patients find their medical bills confusing, which decreases the likelihood that they’ll pay on time, if at all. In the same survey, 27% of respondents said that their confusion leads to uncertainty on their ability to pay. 

A clear, empathetic discussion can make all the difference. Patients are much more willing to make their payments if they understand what is owed. And of course, this point ties in nicely with offering payment terms, as discussed above.

When patients feel you’re on their side, as a provider rather than a collection agency, you’re much more likely to get paid.

Invest in Smart Technology Choices

I’ve already briefly touched on the use of electronic health records, patient management software, and practice management software, and how they can be used within an early out program.

The main considerations to keep in mind when evaluating your systems are how they integrate with each other, your online portal, and your secure payment processing providers. (If you’re considering switching or adding tools but aren’t sure where to start, feel free to connect with me for a quick consult.)

Beyond these basics, though, there’s a world of game-changing technology that you can implement to significantly increase patient payments. 

I understand that these aren’t readily accessible for every organization, but I mention them in case you’re looking to create a long-term plan. Here are the ones we’ve found to be especially beneficial for our early out services:

AI Speech Analytics with Sentiment Analysis

Third-party tools like Livevox and Prodigal work incredibly well to help you create and refine your call scripts, as well as gauge how the conversations are being received by patients.

They also offer real-time reporting to help assess and improve the performance of your admin staff’s inbound and outbound calls, which is particularly helpful when you’re first rolling out your strategies.

Data Analytics

If you have the bandwidth and staff availability to invest in analytics platforms like Tableau and PowerBI, you can discover a wealth of critical information with the click of a mouse.

Here are just a few of the ways we leverage our clients’ data when helping them with early out and debt recovery:

Predictive Analytics: Uses historical data to forecast patients’ payment behaviors. By understanding which patients are more likely to pay their bills on time, you can prioritize collection efforts and allocate resources more effectively. This helps to reduce bad debt and improve cash flow.

Trend Analysis: Involves examining data over time to identify patterns and trends. See which times of the year payments slow down, for example, and adjust your strategies accordingly. This in turn allows for proactive adjustments to collection strategies, leading patients to pay more reliably, for more consistent revenue.

Segmentation: Enables categorizing patients based on various criteria such as payment history, demographics, and financial status. This allows for personalized communication, which improves patient engagement and increases the likelihood of timely payments.

Key Performance Indicators: Allows for easy tracking of your program’s effectiveness. The most important KPIs to watch include payment recovery rates, missed call reports, days in A/R, patient satisfaction scores, and email open rates. Understanding your KPIs will alleviate bottlenecks and help you understand which strategies will result in the highest ROI.

Our Extended Business Office Can Do It All For You

Throughout this article, my goal has been to provide you with several strategies—some simple and some admittedly more involved—to help you initiate an early-out program that strengthens revenue and increases patient loyalty.

At the same time, I understand that many busy medical offices just don’t have the time, money, or training capabilities to create a program that ultimately encourages patients to make their overdue payments reliably and consistently.

If you’re intrigued by the many benefits discussed here, I’d be happy to chat about the ways we can consult on your early-out setup, or even handle it for you.

Not only will you realize a 5-10X ROI, you’ll resolve outstanding debts, move fewer accounts to collection vendors, and eliminate the need to either continually chase patients or write off bad debt. 

Check out what our clients have to say, review our 175+ 5-star patient reviews, and let me know how we can help.

Increased revenue is just around the corner!

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