Modernize Your Collections Cycle: Essential Strategies for an Efficient Revenue Cycle

In today’s evolving healthcare landscape, patient responsibility for healthcare costs has grown substantially, and as a result, the collections process has become a pivotal component in sustaining a healthy revenue cycle. Traditional approaches to collections may no longer be effective in capturing revenue efficiently. This article provides a roadmap for remodeling your collections process, offering actionable insights, practical examples, and case studies to help healthcare organizations optimize their revenue cycle through a more strategic collections approach.

Modernize Your Collections Cycle

With a larger portion of revenue coming directly from patients, optimizing each aspect of your collections cycle is essential. In many cases, post-service collections might be the only opportunity to collect. To secure patient payments, practices should invest in a well-structured collections process, refined to maximize successful outcomes.

One of the projects we undertook for a large multi-specialty clinic involved reengineering its collections process by implementing automated follow-ups. This significantly increased the clinic's patient collection rate. By sending a series of automated reminders, we reduced the time to collect payments by 20%. This improvement allowed staff to concentrate on more complex cases, ultimately enhancing the overall cash flow.

Be Strategic with Integrations

One of the key areas for remodeling collections is to integrate patient-facing transactions into your systems, eliminating as much manual intervention as possible. This automation can streamline the collections process and simplify the patient experience.

Here are practical steps to leverage integration for improved collections:

• Utilize Stored Payment Information: If a patient has stored payment information, use it to automatically process outstanding balances.
• Automate Statement Processing: If a patient has no coverage or payment method on file, set up systems to automatically send a real-time statement to the guarantor.
• Trigger Statements Post-Claim Adjudication: For insured patients, after claim adjudication, route any remaining balance to the statement process, and deliver this to the guarantor via text, email, or the patient portal.
• Promote Self-Service Payment Tools: Enable patients to pay through smartphones or online portals. Self-service tools provide patients with an easy way to view and settle their bills without administrative intervention, helping to accelerate collections and reduce workload.

Case in point, a mid-sized hospital in Los Angeles, California implemented a patient portal that allowed patients to view bills and make payments online. By integrating text message reminders for outstanding balances, they saw a 15% increase in on-time payments and a significant decrease in billing-related calls, enhancing both patient satisfaction and operational efficiency.

Revamp Your Collections Schedule

An efficient collections cycle minimizes delays in communication and maximizes the likelihood of prompt payment. Instead of using arbitrary schedules (e.g., based on alphabetical groupings), a well-designed cycle initiates as soon as patient responsibility is established. An ideal collection schedule should focus on closing the balance within 90 days or less.

Here’s what a sample collections communication schedule would look like:

• Day 0: Initial Statement
• Day 30: Second Statement
• Day 45: Third Statement
• Day 70: First Collections Notice
• Day 73-74: First Nudge Notification
• Day 75: Second Collections Notice
• Day 78-79: Second Nudge Notification
• Day 90: Final Notice

By specifying a due date on each statement and following through consistently, practices can maintain a predictable and reliable process. Some practices have further condensed this process by limiting the cycle to two statements and a collections alert, or by aligning it with bi-monthly payroll cycles to make payments more convenient for patients.

For instance, we tightened the collections schedule for a family practice, shortening its billing cycle from a 30-day to a 15-day cycle, and observed that patient payments aligned more closely with their paydays. As a result, the practice reduced its average collection time from 120 days to 85 days, improving cash flow and decreasing the number of overdue accounts by nearly 25%.

Selecting the Right Collections Partner

If you partner with a third-party collections agency, choose a partner that aligns with your terms and offers seamless communication. The ideal partner should allow for a two-way data interface, enabling your systems to interact automatically with the agency. A high-quality partner also provides comprehensive reporting on collections performance, helping you track and evaluate their impact on your revenue cycle.

Consideration for Financial Hardship

A compassionate and fair collections process should incorporate a financial hardship policy. By considering patients' financial capacity, you not only uphold a patient-centric approach but also avoid futile collection efforts. A hardship policy may involve:

• Offering discounts based on the patient’s financial circumstances.
• Developing an application process to assess eligibility.
• Collaborating with community resources to respect existing hardship determinations, where possible.
• Ensuring consistent application of the hardship policy.

For example, a notable healthcare organization in Austin, Texas had partnered with a local charity to screen patients who may qualify for financial assistance. By incorporating this hardship assessment into their collections process, they provided substantial adjustments for qualifying patients, reducing the risk of uncollectible debt and fostering trust in the community.

In Conclusion: Building a Sustainable Collections Process

A remodeled collections process is not just about recouping funds quickly but creating a system that is fair, efficient, and adaptable to changing healthcare demands. Through a combination of automated processes, optimized schedules, thoughtful partnerships, and compassionate financial policies, healthcare practices can build a collections process that strengthens the entire revenue cycle and fosters a positive patient experience.

At Bristol Healthcare, our team of accounts receivable management experts, and certified coders and billers, follow a field-tested holistic approach designed to maximize revenue and minimize your administrative burdens. Our accounts receivable management services include:

• Patient Billing and Invoicing
• Insurance Claim Submissions
• Claims Follow-up
• Denials and Appeals Management
• Collections

Click the link to explore our range of accounts receivable management services (or) Schedule a no-obligation free consultation to explore how a partnership with Bristol Healthcare can help achieve your financial targets and scale your business.