Forecasting the Financial Future of Your Practice
Health spending for 2010 in the U.S. was $2.6 trillion, an average of $8,402 per person. Of the $2.6 trillion 31% was absorbed by hospital care, while doctors and clinics absorbed 20%. According to the Commonwealth Fund, “National health expenditures are expected to increase from $2.9 trillion to $5.5 trillion. Business and households are projected to pay half of the total nation health care costs in 2023, while the federal government will pay 23% and state and local government will pay 18%.”
Based on the data above, reimbursement models are moving from a fee-for-service to other reimbursement models. These models may have components of fee-for-service, but also include shared savings for managing overall population health. It is critical that you understand and determine how future reimbursement models will impact your organization.
The reality is that median incomes in the U.S. decreased between years 2010-2011 by 1.7%, (average family median income $62,273)”, according to the Income, Poverty, and Health Insurance Coverage in the United States: 2011. Even though the median income levels have dropped consecutively the past two years, health insurance premiums continue to rise from 19-23% of the median household incomes. (Ref: CPS ASEC 2001-2012 Kaiser/HRET 2001-12 CMS OACT 2012-21)
So the question remains, “How will the private practice survive these changes?”. The only way to survive is transitioning your practice to coincide with reimbursement models and other trends in the market. Even though the transition does not have to all take place at once, the transition needs to start immediately. The impact of not implementing processes and procedures to meet the payment trends could lead to financial ruin.
Financial clearance is no longer an option or luxury. Employers are either shifting more health insurance costs to employees, reducing health plan options, or transitioning to a consumer driven health plan. Since employee wages have consecutively decreased and patient responsibility continues to increase (over double in 5 years), providers have to know before treating the patients what the patient responsibility will be and collect it at the time of service (TOS). There are many automated processes and vendors that offer services to ease the burden of the providers. Many of the processes will actually feed directly into the patient’s account in the practice management software (PMS). This all can take place without requiring any actions from the practice other than reviewing the information and acting accordingly.
Automated payment options.
Set up automated payments and allow patients to pay online. When there are remaining patient balances, allow your patients to pay online or set up automated payments. Paying bills via the U.S. Postage service is no longer a common method, although physician practices still commonly utilize paper statements. For many, it has become cumbersome to even find a stamp considering many bills today are paid electronically. Why not make it convenient for your patients to pay. At the TOS allow your patients to set up a secure payment. Many financial institutions have wonderful solutions from freezing funds until the claim is adjudicated to setting up a set amount of money and payments until the balance is satisfied. The payments are then downloaded and electronically posted to the PMS.
Educate your patients on their benefits and responsibilities. Remember, health care is confusing and can be very overwhelming. By allowing the patient to understand their benefits and financial responsibilities, you will allow them to take ownership of the bill. This is a great opportunity to add value to your service.
Quality of care.
Quality of care is here, are you ready? Quality of care is no longer a value add service you are providing to your patients, it is becoming a requirement. Reimbursement models are transitioning to bundled and value based payments. While this will be exciting for many providers it is going to be devastating for others. Providers can take many steps now to be proactive in quality of care. These steps could include: continued training for staff, survey patients on quality of care, or even just take a second and ask the patient as they are being treated. Just be careful…do not ask the question unless you are prepared for the answer! It may not be the answer you were expecting.
When it comes down to it, patient satisfaction will be fundamental in survival of private practices and other healthcare organizations. Providers and other healthcare organizations should be vested into providing quality care and educating their patients on making wise health care decisions. This in turn will encourage patients to become vested in their health care benefits and spending.