By Pete Heydt, President, PatientPay
LinkedIn: Pete Heydt
LinkedIn: PatientPay
When half of rural hospitals are operating in the red and 418 are vulnerable to closure, the data alone are a call to action for new approaches to capturing revenue. Turning up the focus on patient financial engagement in ways that meet consumers where they are is one essential step.
Rural hospitals are feeling the squeeze financially like never before. Research from The Chartis Group shows a dramatic rise in rural hospitals operating with negative operating margins, from 43% in 2023 to 50% in 2024, the largest jump Chartis has recorded in a 12-month period.
It’s a scenario leading to specialty care deserts and disrupted service in rural communities, and it necessitates a new approach to capturing out-of-pocket payments—one that respects patient-provider relationships in small communities and leaves both patients and staff feeling empowered. That’s one of the biggest areas where rural hospital revenue cycle teams can make a difference.
The Need for Better Financial Engagement
Just 21% of hospital finance and revenue cycle leaders strongly believe their organizations do an excellent job of explaining financial matters to patients, a Spring 2024 HFMA survey found. Two out of five have received feedback that their price transparency efforts have improved, and two-thirds plan to ramp up investments in front-end processes, where conversations around cost and the need for financial assistance ideally begin. Given that 64% of patients say they did not receive a cost estimate before care, that’s important for building trust.
But while interest in digital tools and robotic processes among finance and revenue cycle leaders is increasing—with 41% actively using these tools and 19% planning to invest—just 44% plan to dedicate investments in back-end processes, where payment takes place, over the next three years, the HFMA survey shows. That could present a missed opportunity to clear up payment confusion and engage patients in fulfilling their financial responsibility for care.
For rural hospitals in particular, making the right moves for patient financial communication and engagement at both the front and back end of the patient encounter could serve as a financial lifeline while strengthening patient relationships.
When patients can easily access information regarding how much they owe, how this amount was calculated and their options for payment, they gain a greater sense of control over their financial aspects of care. This puts patients in a better mindset to take action. It also leaves a positive impression of their provider. From there, hospitals that make it easy to take the next step—payment—strengthen their chances of collecting the patient payment because doing so is both convenient and recognized as the right thing to do. Some tools even increase the likelihood that patients will respond faster, further protecting a rural hospital’s bottom line.
Achieving Better Engagement by Design
Building the right approach to patient financial communications and payment matters. Here are four suggestions for developing a more patient-centric, action-oriented approach.
1. Look for ways to improve the entire patient financial journey. Like any industry, the hot topic of the minute for healthcare fintech seems to ebb and flow, from the use of propensity-to-pay scoring to predictive analytics to machine learning to artificial intelligence (AI). No wonder it’s challenging for rural hospitals to know what to do. All that noise may explain why these hospitals often look for someone else to guide them in their investments. Some become too overwhelmed by the range of choices to make a decision.
The simplest approach is to look holistically at how your organization approaches patient financial responsibility and try to make small improvements at each step. Deliver preservice treatment estimates and plans where it makes sense to increase clarity and capture some payments early in the process. Empower and educate registration staff to ask for past due balances. Finally, leverage techniques and capabilities to improve your post-service process versus settling for “what we’ve always done.” Patients are more likely to pay their bills on time and even early when they know what they owe and why.
2. Take a behavioral science-based approach to patient financial communications. There is both an art and a science to prompting patients to take action on their healthcare balance. This is especially true in rural communities, where revenue cycle staff are likely to run into patients at the grocery store, at school functions and in church. First, know your audience. What is the likelihood that a patient will pay their bill, whether due to income level or based on past payment history? These factors as well as patient preferences, such as a demonstrated preference for paper-based communications, should guide the revenue cycle team’s approach to whether to send communications digitally and how often.
Crafting the right messaging is also vital. Look for ways to anticipate consumers’ questions and answer them on the first screen they see. For text messages in particular, keep messages short—the length of just one text bubble. Then, make sure the link takes patients directly to their account, without the need to sign into a patient portal. A secure mechanism for payment completion that is also highly convenient increases an organization’s chances for faster payment and an experience that resonates.
Finally, give digital communications time to breathe. For example, one provider waits seven days after delivering an electronic communication before sending a second text to allow patients time to respond.
3. Lean into text-based tools for communication and payment. As rural hospitals explore which digital investments to make for revenue cycle, incorporating a solution that uses the device consumers use most—their smartphone—is a pragmatic step toward boosting patient financial engagement. It’s a tool that can be incorporated at the front end of the patient encounter, where effective communication helps strengthen patient loyalty, and on the back, where an easy-to-navigate payment experience gives patients a greater feeling of control.
4. Don’t be too quick to rely on an EHR vendor for support. More and more, we’re seeing EHR vendors promote solutions for everything from AI-based communications and scheduling support to mechanisms for payment collection. But when a rural hospital’s bottom line and their reputation in the community are at stake, the organization needs more than a patient portal-based approach to payment. Today, best-in-breed payment solutions incorporate predictive analytics to inform patient financial communications, down to the hour in which consumers are most likely to respond. By investing in a tool specifically designed with consumer payment behavior and best practices in digital design in mind, CFOs and revenue cycle leaders can be more confident that their investment will lower days in accounts receivable—critical to financial health.
As rural hospitals explore digital investments that could boost financial performance while building trust, taking a more modern approach to patient financial engagement and payment—one that is grounded in data science and consumer convenience—could prove essential to making a turnaround.