HFMA homes in on ‘dollars and sense’ consumer era
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.