“In art and photography, the ‘vanishing point’ is the point at which two lines converge, meeting at the horizon line and suggesting three-dimensional space,” Jeff Lagasse writes over at Healthcare Finance News. “In hospital revenue cycles, the vanishing point is $7,500. That’s the dollar amount at which hospitals have great difficulty collecting patient balances, according to new findings from public accounting, consulting and technology firm Crowe. Beyond $7,500, collectability drops off significantly. Data through calendar year 2021 has uncovered some trends that place greater strains on providers’ ability to collect self-pay patient service revenue. And as sudden operational cost pressures –- including nursing shortages and higher wages -– frustrate hospital financial leaders, an inability to collect all expected revenue further challenges razor-thin operating margins. One of the leading sources of this net revenue challenge is bad debt – write-offs associated with patient balances that are deemed uncollectible after significant efforts by the provider. Whereas most of the bad debt in the past was attributed to uninsured patients, the majority of bad debt now is associated with patients with insurance, the research showed. Self-pay after insurance accounts for almost 58% of bad debt. At the same time that patients without insurance seem to have greater access to charity care, the increased number of high-deductible health plans … has changed the makeup of what it means to have health insurance coverage. For most hospitals, the change just means they have to collect more from the patient. Self-pay-after-insurance patients -– the deductible amount and/or the residual amount due from the patient after insurance payment -– represented nearly 60% of patient bad debt in 2021, a fivefold increase in just three years. … 2021 marked the first time that self-pay-after-insurance accounts were the leading source of bad debt for hospitals. Meanwhile, the proportion of total patient statements with balances of more than $7,500 has more than tripled since 2018, up to 17.7%. Balances greater than $14,000 nearly quadrupled from 4.4% in 2018 to 16.8% in 2021.” Jeff Lagasse, “High out-of-pocket costs are negatively affecting revenue cycles,” Healthcare Finance News.
Jeanne Pinder is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded... More by Jeanne Pinder