Hospitals across the country are starting to hit up patients for part of their bill before discharging them _ and sometimes even before treating them.
The aggressive new push is part of a broad effort by hospitals to cut bad-debt expenses. These expenses, which amount to billions of dollars in losses for U.S. hospitals each year, have been soaring due to increasing numbers of uninsured patients and changes in health insurance that push more costs directly onto patients. Much of that debt is simply uncollectible because the patients are too poor to pay. But a growing portion is due to insured patients who fall behind on the deductibles and co-payments that their policies don't cover. As a result, hospital administrators are stepping up efforts to collect on the patient portion of the bill.
Starting later this month, HCA Inc., the nation's largest hospital chain, will begin asking patients to pay their co-payment before receiving nonemergency treatment. If patients say they cannot afford it or don't have the money, the hospitals will ask for at least a down payment. HCA is implementing the new approach in each of its 191 hospitals.
Griffin Hospital in Derby, Conn., last month started dispatching collection agents to patients' rooms to discuss their bill; and began steering them through the business office before discharging them. The hospital is also asking for payment upfront for some nonemergency services.
The amount of money at stake is huge. The total cost of unreimbursed care was $22.3 billion at 4,927 U.S. hospitals in 2002, the latest year for which data are available, according to the American Hospital Association. Hospital administrators say that if they can collect on even the small portion of what is attributable to insured patients, it will make a significant difference to their bottom lines.
None of the hospitals is seeking payment before patients are seen in the emergency room, where hospitals by law must provide treatment regardless of a patient's ability to pay. So far, none of these programs is resulting in denial of services. Hospitals say they will still treat a patient who doesn't pay upfront for nonemergency care. But Griffin is asking emergency-room patients for co-pays after they've been treated. And the power of persuasion is proving effective. Studies show that hospitals are more successful in collecting from patients before they leave the hospital than months later when they get a bill.
So-called time-of service collection isn't a new idea. Doctors have long asked patients to fork over a co-payment at the time of a visit. But hospitals are increasingly implementing these strategies now, or making them tougher, for several reasons. For one thing, improved technology gives more hospitals the real-time information to figure a patient's deductible and co-payment amounts. For example, at Tenet Healthcare Corp., the nation's second-largest hospital chain with 98 hospitals, administrators are going online to determine a patient's co-payment, among other tactics as part of a pilot program in Florida to improve collection procedures.
The more aggressive billing stance is expected to have a significant impact on hospital finances. "My goal is to reduce elective services that go to bad debt by 50 percent within a year," which would lead to an additional $2 million a year in revenue, said Karen Dostart, manager of business services at Marshall Medical Center in Placerville, Calif. Marshall is working up a plan to contact elective-surgery patients about their obligations in advance of treatment. For patients admitted through the ER, a hospital-staff member will go to their rooms to discuss their "responsibility," Ms. Dostart says.
At HCA, based in Nashville, Tenn., about 25 percent of the $2.2 billion in bad debt incurred during fiscal 2003 was due to uncollected co-payments for insured patients. Officials there say that even if a patient makes just a small down payment, it helps establish the principle of patient responsibility and pave the way for additional payments after a patient returns home.
Hospitals face problems in collecting payments that are different from those of other consumer-service providers, says Carmela Coyle, senior vice president for policy at the American Hospital Association. Unlike purchases for cars or clothes, "hospital debt isn't something the patient wants to incur, so it creates a different feeling around the obligation," she says.
As they struggle to improve their finances, hospitals are wary of criticism from consumer activists who have attacked aggressive collection efforts by some institutions during recent years. Hospitals counter that they are focusing their current efforts on seeking payment from people who can afford to meet their obligations _ or at least some part of them. And they say that such collections help them provide charity care to patients who are too poor or sick to pay.
Nevertheless, not all medical centers are stepping up such efforts. Universal Health Services Inc., a for-profit chain based in King of Prussia, Pa., has always made an effort to collect co-payments on the day of service, and isn't making any changes, according to Chief Financial Officer Steve Filton. The existing efforts have been met with mixed results, he says, and some patients still just don't pay.
At Griffin Hospital, a 160-bed facility about 10 miles southwest of New Haven, Conn., patients seem resigned to the new financial requests. No one has walked out or refused to pay, administrators say, though one patient did ask a bill collector to leave her hospital room.
One recent afternoon, a Griffin bill collector met with a 41-year-old self-employed contractor on the same day he was admitted for treatment of an infection in his right arm. Jay Veillette, who has Oxford Health Plans Inc. insurance through his wife's employer, was asked to make a $500 payment, the amount of his deductible, before he was discharged.
"I don't blame them," Mr. Veillette told a visitor, as he lay in his hospital bed. "I own my own business and I always get some money upfront." He said he couldn't spare $500 at once, but could pay $25 a month through a plan that the hospital offered.
In some ways, Griffin's new collections policy has been harder on employees than on patients. Griffin has long prided itself on being "friendly" to patients _ bringing in musicians to entertain them and "therapy" dogs to cheer them up.
Grady Health System in Atlanta, Georgia's largest public hospital, implemented a new billing system in January in an effort to collect payments at the time of service. Patients scheduled for procedures are called in advance and informed of their co-pay, among other changes. "We are trying to increase our ability to collect from those with insurance," President and Chief Executive Officer Andrew Agwunobi says.
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Settle Up
Some tactics hospitals are employing to get patients to pay at least part of their bills before they leave:
_ Sending collection agents to patients' rooms to go over co-payments and deductibles
_ Steering patients through the business office before discharge, to settle a bill or set up a payment plan
_ Asking for co-payments and deductibles, or at least a down payment, before elective procedures