Closing the Loop: Overcoming Patient Payment Obstacles for Revenue Cycle Optimization

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For our clients who are staring down huge amounts of bad debt related to services their patients haven’t paid for, the trend toward much higher patient payment responsibility can mean a hot-and-cold relationship with patients.

It’s possible this stems from a disconnect on both sides of the equation: Many patients don’t understand that they are now responsible for paying for more of their healthcare services, and some practices have not yet optimized their processes to make patient payment easy and efficient.

The world has shifted for many of our clients and healthcare organizations of all type and sizes. According to the Medical Group Management Association’s (MGMA) research in 2010, $1 in every $4 of payments comes from patients, and that trend has only continued and intensified since then.1

The patient wields unprecedented power and responsibility in the new healthcare terrain, and many healthcare organizations aren’t doing enough to facilitate better patient relationships and smoother patient payments, which is directly impacting revenue.

Healthcare organizations are increasingly living in a market that requires them to look at their process as a sales funnel in ways they never anticipated before. With increased patient payment responsibility comes increased choice. With choice comes the need for providers to attract potential patients, delight them with a flawless patient experience, and then pave the way for those patients to become paying patients by lowering barriers.2

Patients As Payers

Patients are notoriously bad payers. Understanding all the reasons why patients might not pay for their health services can be the first step to crafting a funnel that helps guide patients to payment.

Back in 2010 when the MGMA study came out, high-deductible health plans (HDHP) accounted for 15 percent of patient service revenue. That number has undoubtedly increased with the arrival of the Affordable Care Act. HDHPs can complicate patient payment matters because although the patient is responsible for a larger share of payments due to a high deductible, the claims process still goes through the insurance company, adding an extra layer of work for providers and possibly confusing patients.3

Many providers are also simply caught between conflicting patient expectations. Some modern patients expect a retail service-like experience, a health “concierge” really, and do not necessarily get what they expect. Others have become conditioned to putting off medical invoices through tough economic times, or are simply confused about their responsibilities versus what their health insurance will cover.

Patients also generally have little understanding of costs, having been shielded by layers of insurance for a long time. We’ve heard stories of patients simply refusing to pay on principle once they realize that they will need to cover the cost of the service and not just a $20 copay as before. Others feel that they can actively negotiate the cost of services, or will cite old payment structures under old healthcare plans as evidence of what a service “should” cost.4

Providers should ensure their front-line staff are trained and educated on ways to work with patients who are experiencing sticker shock. Organizations also can promote more transparency in their fees and costs, and talk to patients ahead of services to set expectations and combat poor reactions.

Here are some additional statistics from the MGMA study that emphasize the need for CFOs and other healthcare executives to understand fully their patient payer situation:

  • A whopping 30 percent of patients left healthcare providers without paying for services rendered on that visit.
  • Providers sent, on average, 3.3 billing statements to patients before outstanding balances were paid.
  • Once a bad debt was turned over to collections, respondents recovered only $15.77 on average for every $100 owed. That’s a bad prospect in any business, and it can cripple a revenue cycle.

Better Patient Payment Systems Go From Beginning to End

Patients interact with your organization and your systems at almost every stage of the process. Take the time to evaluate and optimize your patient revenue system on two levels: patient satisfaction and experience, and your revenue cycle.5

At a minimum, modern healthcare organizations that are seeing a significant amount of patient responsibility should:

Take payment at the point of service (POS).

  • Patients are much more likely to pay with cash or card at POS. These are more secure forms of payment that enter your revenue cycle immediately. Practices must have a way to accurately calculate payments expected at the time of service or the refund process will add a layer of complexity and cost.
  • Patients are much less likely to pay when receiving a billing statement after the fact, and when they do pay it, it’s often with a check.
  • Providers also should allow and encourage payment of past due bills at the time of the current service.6

Use propensity-to-pay software.

  • Propensity-to-pay software is not used to pre-qualify patients in any way, but rather, it helps you predict payments and adjust your revenue cycle appropriately. Some payers also have “payment estimators” that are integrated with the patient’s plan for accurate POS cost estimations.

Lower barriers to payment.

  • Take advantage of technology to create better systems such as online portals or easy POS payment capture for your front-line and scheduling staff.
  • Offer plenty of options for payment. Take cash, checks, and all types of credit and debit cards, and offer the option to pay with credit card over the phone for non-POS payments.7 At the same time, be careful of options. Some specially designed healthcare credit cards charge a high fee rate to the provide, and it may not be worth it.

Develop alternatives to collection.

  • Alternatives to collection may include deciding to write off a certain amount of bad debt from past due patient services, especially from payments with low propensity-to-pay scores. This could save you time chasing collections.
  • Develop a patient education system to teach patients about how their insurance works, their responsibilities based on their plan, and why they can expect certain costs.
  • Work with patients on payment plans before sending the account to collections. This can ensure that you are at least collecting some payment on the account.8

As it happens, the patient process does not have a beginning or an end. For optimized organizations, it’s a loop. When a patient ends a particular interaction with you after paying for a service, you should ensure that your branding is strong enough to close that loop. Keeping your organization top of mind and continuing to attract and delight the patient well after the service helps ensure that patient chooses you again when it comes time for the next service.

We all love patients. Everything our clients do is dedicated to providing better care and promoting patient health and wellness. It’s easy to understand our clients’ frustrations with patients who do not pay for their services since it’s hard to imagine not paying for any other similar services, but it doesn’t have to be an area of frustration. With some adjustments to the process, healthcare providers can see vast improvements not only in patient payments but in overall patient satisfaction scores, which only helps optimize their revenue cycle.

Physician Revenue Navigators is a leading healthcare revenue cycle management partner, supporting healthcare organizations of all different practice types in all aspects of a healthy revenue lifecycle, including coding, billing, contractual adjustments, collections, HIPAA compliance, and more. Contact us to learn more about how we can assist your organization.

Show 8 footnotes

  1. James Margolis and Christina Pope, “Perspective on Patient Payments,” MGMA Connexion, Medical Group Management Association, April 2010,; Stephanie Bouchard, “Patient Payment Responsibility Increases,” Healthcare Finance, June 11, 2013,
  2. Chuck Farkas and Tim Van Biesen, “The Future of HealthcareThere’s an App for That,” Bain & Company, June 5, 2012,
  3. Jim Wharton, “Increasing Patient Payment Responsibility Doesn’t Have to Hurt Your Revenue,” June 5, 2014, The Daily Practice,
  4. Rachel Zimlich, “As Patient Payments Rise, so Must Payment Options,” Medical Economics, May 16, 2012,
  5. Ibid.
  6. Ibid.
  7. Margolis and Pope, “Perspective on Patient Payments,” see reference 1.
  8. Chris Wyatt, “Increasing Patient Responsibility Requires a Modern Billing Approach,” Healthcare Financial Management Association, May 18, 2015,

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