Hospital Bad Debt Is On The Rise.
Learn Strategies To Lower
Your Bad Debt

Hospital bad debt is growing. According to a 2008 survey by credit reporting agency, TransUnion, almost 80% of hospitals reporting showed bad debt growth of between 6 and 20 percent since the last 20 months. The same survey expressed hospital executive's concerns that this bad debt will grow over the next two years, largely due to consumer-directed healthcare plans.

Clearly expressing this concern, hospital administrators cite improving collections, and decreasing bad debt, as their top business priority.

The present economic crisis, with many predictions that things will get worse before they get better, is a major contributing factor to this growing hospital bad debt.

A survey by the American Hospital Association indicated rising numbers of patients unable to pay for care. From July through September of 2008, this number was up 8 percent, compared to the same period in 2007.

According to Kaulkin Ginsberg, a research and consulting firm, in 2005 U.S. healthcare providers set aside an estimated $129 billion, or about 7% of total revenues, to cover bad debt. The American Hospital Association states that in 2006, the nation's community hospitals spent about $31.2 billion on bad debt!

As a number of Americans are facing possible foreclosure, job layoffs, and less availability of credit, many are holding back on paying their medical bills to cover their other expenses.

Another major contributor to growing hospital bad debt is the number of uninsured Americans who have no health insurance, and are not Medicare or Medicaid-eligible. Today, that number is estimated to be around 47 million without any health coverage.

Improve Internal Hospital Collections

• Setting up patients on a payment plan can lessen the sting of a large bill; especially if the balance is only a few hundred dollars. Get them to agree to smaller monthly payments.

• Make sure that you have a clear, formal and written payment and collections policy in place so patients know what's expected of them, as well as the consequences for not paying on time. It should include when payment is due, either at time of service, or within 30 days after service is provided.

• Your policy should also clearly state when past due accounts will be turned over to a collection agency. For instance, you can say that after 60 days of non-payment, past due accounts will be turned over to a third party collection agency. Having this clearly in writing can help reduce hospital bad debt.

• Debt scoring is another tool that can help you quickly identify problem patient accounts before they escalate.

• Also, turning accounts over no later than 60 days greatly improves your recovery chances. It both helps to identify the "problem" late-paying patient sooner rather than later, as well as suggest payment options to patients willing to resolve their accounts.

• Hospitals should consider providing financial counseling to patients about their hospital bills. This will greatly improve the hospital's public relations image as a community service provider. Because of their core mission to serve, this helps build community trust when hospitals are seen as compassionate and caring.

Learn how other hospitals and medical facilities are either successfully dealing with hospital bad debt, or writing of their problems and concerns. We welcome your contributions as well. Tell us your success stories, or of the issues you're facing with hospital bad debt.

When the time and costs of pursuing delinquent accounts internally become too cost prohibitive and unsuccessful, consider turning these accounts over to outside third party collection agencies. Just ensure that they reflect the values and policies set forth by the hospital.

If you want a debt collection quote for your hospital, medical clinic, or doctor's office, complete the quick form below. One of our consultants will contact you within 24 to 48 hours.