Debt Connection Symposium: Medical Debt Sales on the Rise

Health care is quickly moving to a consumer-based model prompting many providers to sell the resultant bad debt, Mary Beth Briscoe, former national chairman of the Healthcare Financial Management Association told an audience Wednesday at the Debt Connection Symposium and Expo in San Diego, Calif.

There were 47 million uninsured Americans in 2007, nearly 16 percent of the population, according to Briscoe. That number nearly doubles to 89.6 million when looking at the number of American uninsured for at least part of the two-year period of 2006 and 2007.

By contrast, the number of uninsured Americans in 1999-2000 was 17 million.

Even insured Americans are paying much more for their coverage, with premiums growing 6.1 percent in 2007, while deductibles and co-pays went up for 95 percent of the population, Briscoe said. Out-of-pocket spending has grown to more than $300 billion in annually.

These increases are giving rise to more consumer-driven health care plans, Briscoe said. Since insured patients are absorbing more of the costs, they are paying more attention to what health care providers are charging.

Therefore, health care providers need to adopt patient-friendly billing, which Briscoe defined as plans that include transparent and justifiable pricing along with a demonstrated quality of care provided.

Health care financial managers need to realize that patients are becoming more knowledgeable, sophisticated and demanding, as well as more price conscious, Briscoe added.

At the same time, hospitals are writing off more than $30 billion annually in unpaid medical bills. But health care organizations lack the personnel and technology needed to effectively manage active receivables and bad debt.

So health care organizations are selling an increasing amount of charged-off debt. Patient accounts with face values of more than $4 billion were sold in the last 12 months to credible third-party purchase purchasers.

To improve collections and reduce the amount of charge-offs, Briscoe recommended that health care providers:

•    Move patient communications earlier in the revenue cycle process
•    Offer options on payment terms tailored to specific financial ability to pay.
•    Finalize agreement with patients on payment expectations and terms
•    Shift financial clearance to earliest process in the revenue cycle
•    Make the process easy and convenient for patients