Moving Payment Up-Front: How to Optimize Point-of-Service Revenue Collection

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“Would you consider bringing your car in for an extensive repair job that takes highly skilled mechanics several hours, and then drive your car away without paying?”

Of course not. None of us would. We have heard this and similar analogies from our clients and colleagues when lamenting all the revenue hits the practices are taking due to patient payment-related bad debt. The healthcare industry spends more than $400 billion annually on payments, billing, claims processing, revenue cycle management, bad debt, and collections. As patients’ out-of-pocket expenses continue to balloon, and high-deductible health plans (HDHP) become increasingly common, healthcare organizations must find a method of collecting more from patients.1

So how do healthcare facilities go about increasing net patient revenue (NPR) while simultaneously encouraging behavior change in patients? By focusing on collecting payment at the moment the patient comes in for the healthcare service.

When organizations pivot to point-of-service or point-of-sale (POS) collections, NPR increases, and the entire revenue cycle has fewer gaps. It also helps encourage patients to think of healthcare the same way they might an automotive tune-upnecessary, a combination of routine and as-needed, and a service to be paid for when rendered. More yield from POS collections also means that your organization can focus the energy of your billing staff or partners on claims from non-patient payers.

Why POS Collections Show Immediate Impact in Your Revenue Cycle

Currently, hospitals are seeing POS collections make up about one percent of their NPR, and it is likely close to that for other types of healthcare organizations. The Advisory Board Company emphasizes that with all the changes and increases in patient responsibility, optimized organizations will want to see that figure at about five percent of NPR collected at the point-of-service.

While we used to consider health plans with deductibles upward of $1,000 to be “high deductible” plans, the new reality is that many patients will come in with deductibles in the area of $5,000 or $6,000. Finding ways to help patients navigate a new payment landscape can mean your organization gets paid more often.2

From 2011 to 2014, providers’ median POS collection went from $0.7 million to $1.8 million, and revenue per bed increased from $2,660 in 2010 to $5,780 in 2013. The emphasis on POS collection had a direct impact on overall patient revenue collected and also lowered providers’ bad debt, according to the four-year study.3

POS collections directly impact your revenue cycle by getting that revenue into the cycle much faster and without the added risk and wasted time of a rejected claim. Remember that $400 billion figure, the amount that the healthcare industry spends on all aspects of billing and collections? So much of that expense comes from chasing after collections or having to manage the impact of bad debt. Collecting for services before the patient leaves your facility means that your staff or revenue cycle partner wastes far less time and effort dealing with those issues.

Indirectly, a commitment to POS collections can result in a subtle shift in how patients view their payment responsibilities. It’s much more difficult for a patient to ignore a frontline staff member warmly asking, “How would you like to pay today?” and offering education on payment responsibility compared to a mailed invoice that might be confusing. Additionally, patients who feel as if they are patronizing a streamlined, efficient, technologically advanced healthcare facility can also feel much higher satisfaction scores and brand affinity, even if they are being required to pay at the time of service.4

How to Integrate More POS Collections into Your Organization

Emphasizing POS collections and moving to a POS collection system should be supported from the very top of your organization. Ideally, this move would be a C-suite-led initiative as part of evolving your organization’s entire culture around revenue. Everyone from top to bottom should understand how their role and daily tasks contribute to overall organizational health.

Some key points to consider as you move to integrate more POS collections include:

  • Communication. Inform patients of payment options well before they reach the front desk, and assist them with on-site financial and Medicaid-eligibility counselors.
  • Special consideration for high-deductible health plans. Have a set of payment plan options for these patients, including auto-debits and prompt-pay discounts.
  • Be efficient with your existing technology. Integrate payment registration into your existing patient portal or online system, if applicable. Payment information can be taken at the time patients sign up for elective procedures.5
  • Evaluate your pricing. If necessary, work with a revenue cycle partner on a pricing audit and employ a price-sensitivity strategy. Know your patient base and potential patient audience. Where are their pain points? What are their expectations? Also, know your competitors. Are you competitive in pricing? At what end of the scale?6
  • Use propensity-to-pay technology. Software can help validate patients up-front, which helps your frontline staff tailor education information. Your staff also can target educational campaigns or certain payment options to patients with HDHPs with deductibles over a certain threshold.
  • Train your staff. Ensure all staff that might have patient interactions understand all insurance and payment-related terminology, and are familiar with health plan structures. A lot of staff might find themselves explaining copays, deductibles, out-of-pocket maximums, or other elements to newly-insured patients. Staff members also should know all your payment policies and have scripts on hand to help them if a patient becomes upset or refuses to pay their bill.
  • Create accountability for everyone. Give your staff the tools they need to collect at POS. This includes involving frontline staff in discussions about what changes you intend to make, finding out what tools they need, and optimizing all levels of your organization to empower everyone to think more about revenue cycle and maximizing collections.7 Essential tools include having payer contractual-allowed amounts loaded into the practice management software so that staff can estimate the patient responsibility for participating contracts. You can also use online payer “estimators” that are linked to specific patient insurance plans.

The trending move toward POS collections in healthcare is really about turning an outdated model on its head. Think about how you collect today. Do you use a lot of paper, phone calls, and other outdated modalities? Why should you spend countless dollars and hours on antiquated systems that do more harm than good for your bottom line?

Today’s patients are exposed to technology and accustomed to having a low-barrier experience when it comes to paying for services. They see and interact  with websites, smartphones, tablets, and portals of all kinds every day. They may only buy stamps or get checks to pay invoices from outdated industries like their medical bills. For most patients, technology and modern payment options are native to their world. Healthcare should strive to meet them there. Organizations that create a culture of up-front payments combined with a high level of service will reap the benefits of more revenue and a more streamlined 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 7 footnotes

  1. “Hospital Revenue Cycle Operations: Opportunities Created by the ACA,” McKinsey & Company, May 2013,
  2. Bethany Black, “Think You’re Maximizing Point-of-Service Collections? Think Again,” The Advisory Board Company, March 5, 2015,
  3. Zack Budryk,  “High-Deductible Plans Drive Increased Point-of-Service Collections,” FierceHealthFinance, October 28, 2015,
  4. Lola Butcher, “Patient-Friendly POS Collection Strategies,” Healthcare Finance Management Association, November 26, 2012,
  5. Bob Herman, “5 Ways Hospitals Can Improve Point-of-Service Payments,” Becker’s Hospital Review, September 30, 2011,
  6. Rivka Friedman, “4 Tools You Need to Fix Your Price Sensitivity Strategy,” The Advisory Board Company, October 20, 2015,
  7. Butcher, “Patient-friendly POS Collection Strategies,” see reference 4.

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