Electronic Health Reporter

Guest post by Tom Furr, CEO, PatientPay. 

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? This is not the start of a joke; it is unfortunately all too true. The 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 and found their way into his personal account.

Slow-/no-pay patients have become a much more important aspect of hospital financial management as high deductible health plans (HDHP) become the norm across America. What once was considered little more than an annoying write-off, keeping bad debt to an absolute minimum is very much a priority. Gone are the days when more than 90 percent of revenue came from the insurance companies. Hospitals must look to patients for 50 percent, or more, of that revenue now. My bet is the number of checks embezzled by the attorney has only recently become material, which is why it took so long to catch him.

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-poke-paying patients. But that’s misses the larger point.

Unfortunately, any time checks are directed to third-party services, the potential for maleficence exists. Any point in a process where the payment can be touched, there is an opportunity for a redirection of those funds as in the case of the hospital in the city of fountains.

A significant portion of this could have been avoided if the hospital used an online paperless solution to bill their patients. It cuts off those sticky fingers, figuratively speaking. A paperless method keeps out crooked collectors because there is no reason or way for them to get their hands on the funds since they are not 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 all that unusual or isolated. Perhaps 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 CEOs, CFOs 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 rendered and go about seeking payment, is opening them to the same fate as these other organizations who were robbed and so the time to change is now.

Your customers, those folks you’ve been calling patients, have made it clear how they’d prefer to get their bills — electronically — and that does not mean sending a paper statement with a lot of directions on how to pay at your portal. They want a service that makes it easy for them, not you. Most likely you’re like the 98 percent of other providers who send paper statements through the U.S. Postal Service (USPS). You might direct them to your portal, which was designed to provide healthcare information — not enable easy, secure online transactions. To get there the customer must go to your website, login, assuming they remember the access information, and find a digital version of the bill you sent in paper form. No wonder patients don’t use your portal! It’s exhausting just to get to the point of payment. Not to mention they have to do this for each of their providers requiring multiple log-ins and passwords.

Industry research has found that three or more paper statements must be sent before any payment is received by a provider. That’s a 120 day payment cycle that must send A/Rs soaring.

Even the organization that conveys paper bills to your customers, the USPS, learned through research that 60 percent of respondents prefer to get bills electronically. Other studies, done by Deloitte, Kaiser Permanente and JP Morgan Chase, among others, also found your customers want to get and pay bills online.

And, clearly, they want bills they can understand. In fact, it was the frustration with the bills for my daughter’s injuries that I drove to create a solution that would present bills to customers that they readily understood and pay promptly, electronically. On a consistent basis, 75 percent of customers who get bills via my company’s solution pay upon seeing them.

And, importantly, there are no sticky fingers along the way to divert those funds. Funds hospitals, like yours, need more than ever before.