HFMA homes in on ‘dol­lars and sense’ con­sumer era

Modern Healthcare - - NEWS - By Beth Kutscher —with Rachel Lan­den

Health­care fi­nan­cial man­agers will need to pur­sue new strate­gies for en­gag­ing with their cus­tomers as the health­care mar­ket­place in­creas­ingly op­er­ates like a re­tail con­sumer busi­ness. That means more price trans­parency, a greater fo­cus on get­ting pa­tients to pay their bills and stronger cost con­trols to op­er­ate on thin­ner mar­gins.

At the Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion’s 2014 An­nual Na­tional In­sti­tute in Las Ve­gas last week, the new era of con­sumerism was top of mind. The HFMA, which last year in­tro­duced guide­lines for pa­tient fi­nan­cial in­ter­ac­tions at its an­nual meet­ing, opened the event by in­tro­duc­ing the Health­care Dol­lars & Sense ini­tia­tive.

“Ev­ery year at ANI, we talk about be­ing pa­tient- or mem­ber-friendly,” HFMA Pres­i­dent and CEO Joe Fifer said. “We hear it of­ten but some­times it’s easy to lose sight of what it re­ally means. We’re break­ing that down into pieces.”

The ini­tia­tive fo­cuses not only on fi­nan­cial com­mu­ni­ca­tions, but also price trans­parency and med­i­cal ac­count res­o­lu­tion.

In a sur­vey from Tran­sUnion Health­care, a divi­sion of the credit bu­reau, 84% of re­spon­dents in­di­cated that pre-treat­ment cost es­ti­mates would have a some­what, or very pos­i­tive im­pact on whom they would choose as a provider, rank­ing just be­low out­stand­ing bed­side man­ner (86%) and prompt test re­sults (89%). But only 12% of re­spon­dents said it was very easy to get cost in­for­ma­tion, while 20% said it was very dif­fi­cult.

As pa­tients as­sume a greater share of their health­care costs, they’re be­com­ing more price-sen­si­tive. That means hos­pi­tals are see­ing in­creased com­pe­ti­tion from re­tail play­ers such as CVS and Wal­green stores, and many are find­ing they can’t com­pete on price.

“Hos­pi­tals are de­cid­ing what to do about that part of the busi­ness,” said Ken­neth Kauf­man, manag­ing direc­tor and chair of con­sult­ing firm Kauf­man Hall. “And some hos­pi­tals might just de­cide to let it go.”

There also was con­cern that con­sumers still aren’t pri­or­i­tiz­ing their med­i­cal bills in the same way as their cable or cell­phone bills. In the ex­hibit hall, ven­dors dis­played a va­ri­ety of tools for boost­ing pa­tient col­lec­tions through con­sult­ing ser­vices, soft­ware prod­ucts and data an­a­lyt­ics. There were prod­ucts for pro­vid­ing pre­ser­vice cost es­ti­mates, prod­ucts to screen pa­tients for their propen­sity to pay their bills and ser­vices for set­ting up no-in­ter­est pay­ment plans.

Ad­ven­tist Health Sys­tem has started to use such ser­vices. Col­lec­tion rates at the 44-hos­pi­tal sys­tem have dipped in re­cent years, as more pa­tients have come in with high-de­ductible, high cost-shar­ing plans. In re­sponse, the Al­ta­monte Springs, Fla.-based sys­tem has in­creased pa­tient com­mu­ni­ca­tions, in­tro­duced on­line pay­ment op­tions and of­fered its staff fi­nan­cial in­cen­tives for meet­ing col­lec­tion tar­gets. Pa­tients also can sign up for in­ter­est-free re­volv­ing credit lines through ven­dor ClearBalance.

“Hos­pi­tals tra­di­tion­ally have not been good at col­lect­ing from pa­tients,” said Ken­neth Ursin, Ad­ven­tist’s cor­po­rate direc­tor of pa­tient fi­nan­cial ser­vices. “Our suc­cess rate is much greater if we start col­lect­ing ear­lier in the rev­enue cy­cle.”

Hos­pi­tal mar­gins are shrink­ing as earn­ings from pa­tient care de­cline faster than hos­pi­tals’ abil­ity to re­duce ex­penses. All three credit rat­ing agen­cies have placed a neg­a­tive out­look on the not-for-profit hos­pi­tal sec­tor.

“CFOs have been on a jour­ney to cut costs, lower cap­i­tal spend­ing and meet the chal­lenges of lower rev­enue,” Martin Ar­rick, manag­ing direc­tor at Stan­dard & Poor’s rat­ings ser­vices, said dur­ing a ses­sion on the cap­i­tal mar­kets. “But we no­ticed last year that a lot of or­ga­ni­za­tions are be­gin­ning to lose that bat­tle.”

Cost ac­count­ing and cost-cut­ting were com­mon themes dur­ing the ANI ses­sions. Hos­pi­tal sup­ply-chain costs are ris­ing faster than la­bor ex­penses and are pro­jected to sur­pass them by 2022, said Karen Con­way, ex­ec­u­tive direc­tor of in­dus­try re­la­tions at GHX, which works with providers on sup­ply-chain man­age­ment. Yet many sys­tems lack in­for­ma­tion on what it ac­tu­ally costs them to de­liver care, in­clud­ing how much money is be­ing lost to waste.

Hos­pi­tals also are un­der pres­sure from new pay­ment mod­els, in­clud­ing value-based con­tracts, which typ­i­cally charge lower prices. Their up­side comes from po­ten­tial shared sav­ings, as well as greater pa­tient vol­umes, achieved by steer­ing pa­tients through nar­row provider net­works.

When Memo­rial Her­mann Health­care Sys­tem in Hous­ton formed an ac­count­able care or­ga­ni­za­tion with Aetna last year, prices were set 8% to 15% be­low broader net­work plans. While the goal is to keep peo­ple out of its fa­cil­i­ties, the agree­ment has had a pos­i­tive ef­fect on vol­ume. “We’re push­ing in more lives faster than we’re squeez­ing out uti­liza­tion,” said Christo­pher Lloyd, CEO of MHMD, Memo­rial Her­mann’s physician net­work.

HFMA Pres­i­dent and CEO Joe Fifer out­lined a new in­dus­try ini­tia­tive.

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