by Tom Furr, CEO & Founder of PatientPay

June 2016 – Did you hear the one about the disbarred lawyer who embezzled more than $1.2 million from a hospital in Kansas City over four and one-half years?

A long-trusted attorney supposedly served the hospital by collecting past-due payments from patients. Money collected was to go into a trust account. However, his fingers were more than a little sticky when checks were mailed back from patients. They found their way to his personal account.

Slow- and no-pay patients have become an important aspect of hospital financial management with the rise of High Deductible Health Plans (HDHP). Once an annoying write-off, keeping bad debt to an absolute minimum is a priority. Gone are the days when 90+ percent of revenue came from insurance companies. Healthcare providers must look to patients for 50 percent, or more, of that revenue now.

We can criticize the hospital for not staying on top of its account receivables. Certainly, payment plans offered at the time of service can help keep A/Rs down, as can reminders emailed to the slow-paying patients. But that misses the larger point.

Any time checks are directed to third-party services, the potential for mischief exists. Any point in a process where the payment can be touched is an opportunity for a redirection of those funds.

Such was the case of the hospital in the City of Fountains. Much of its problem could have been avoided if the hospital used a paperless solution to bill its patients. Paperless billing cuts off those sticky fingers, figuratively speaking. A paperless method keeps out crooked collectors because there is no way for them to get their hands on the funds, since they are deposited directly into the hospital’s bank account and reconciled nightly. There’s nothing to touch or divert.

I am of the opinion that this crime in Kansas City is not unusual or isolated. Sometimes a perpetrator is uncovered and reparations are made under the cover of a sealed agreement, but it happens entirely too often.

In the past year I’ve seen reports of CEO’s, CFO’s and Directors shown the door for embezzling millions from healthcare facilities in Alabama, Idaho, and Wyoming, among others. The Alabama case involved a whopping $14 million.

Cash flow has become a top priority for all segments of healthcare, but especially hospitals. As I already suggested, the presence of HDHPs has made it so. But the manner in which these institutions bill for services and seek payment leaves them open to the same fate as the organizations that were robbed. And, so, the time to change is now.

Customers, those folks providers have been calling patients, have made clear their preference for electronic bills — and that does not mean sending a paper statement with directions for paying at a portal. They want a service that makes it easy for them.

Most likely you’re like the 98 percent of providers who send paper statements through the U.S. Postal Service (USPS). Of course, you might say, “I can direct them to my portal.” But let’s be serious, that portal was forced upon you by Meaningful Use Stage 2. It was designed to serve as an electronic repository of patient healthcare information that patients could access; not for easy, secure online transactions. To get to the portal, patients must go to your website, login (assuming they remember the access information), and find a digital version of the bill sent in paper form.

No wonder patients don’t use portals to pay bills! It’s exhausting just to get to the point of payment. Interestingly, more than 60 percent of respondents to a survey conducted by Software Advice among 1,540 patients, found they either did not have or did not know if they had access to their physicians’ portal. In addition, the same study identified a confusing user interface was the top source of frustration in using a portal.

Medical Group Management Association research determined that 3.4 paper statements have to be sent before any payment is received by a provider. That’s a 120-day payment cycle, which must send A/Rs soaring.

Even the organization that conveys paper bills to your customers, the USPS, learned through research that 60 percent of its consumers prefer to get bills electronically. Other studies, done by Deloitte, Kaiser Permanente, and JP Morgan Chase, among others, also found customers/patients want to get and pay bills online. And, clearly, they want bills they can understand. Research conducted by Citibank found that if consumers understood their healthcare bills they’d pay them.

Electronic billing eludes sticky fingers when healthcare providers need their due funds more than ever.


About the Author

Tom Furr is CEO and founder of Durham, North Carolina-based PatientPay. The patient payment solutions company offers patented online billing, collection and reconciliation services that enhance the productivity and profitability of medical practices, ambulatory networks and hospital systems. His experience in electronic payments and online services for small businesses is reflected in the innovative, easy to use PatientPay solutions. PatientPay cuts the time and cost to prepare and issue a paper bill in half, provides bills that get paid immediately upon opening 75 percent of time, and, has a payment cycle one-tenth as long as the typical paper bill.

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