There was once a time when doctors, hospitals and medical facilities were concerned about patients without insurance not paying their bills. Today, they’re stressing to get paid by the patients who do have insurance.
Over the last ten years, insurance companies and employers have pushed the burden of health care costs onto workers and customers, tamping down premiums by raising out-of-pocket costs for patients. Last year, almost half of all Americans insured with private insurance companies under 65 had annual deductibles ranging from $1,300 to as high as $6,550 (information provided by government data).
Rising Medical Costs Forces Providers to Collect Debt
Today, instead of getting paid by insurance companies on a predictable schedule, healthcare providers are being forced to scramble amongst themselves to receive payment. Doctors and health care providers are providing medical care one minute, and then acting as a debt collector the next.
Gerald “Ray” Callas, president of the Texas Society of Anesthesiologists, puts this issue into perspective in the following statement:
“If they have to decide if they’re going to pay their rent or the rest of our bill, they’re definitely paying their rent. We try to work with the patient, but on the other hand, we can’t do it for free because we still maintain a small business.”
Both Private Practices and Large Medical Companies Struggle to Collect Overdue Payments
This growing issue isn’t exclusive to small private practices—large medical companies with national operations also struggle with this problem. For instance, Quest Diagnostics Inc. reported that in their third quarter, 20% of services billed to patients went unpaid. This ultimately cost the company about $80 million.
Quest Diagnostics, Inc. Chief Financial Officer Mark Guinan made a statement on behalf of this rising debt:
“We certainly have a high bad-debt rate for the uninsured. But really the biggest driver is people with insurance. It’s their coinsurance and their high deductibles, and they don’t always pay their bills.”
The Impact of High Deductibles
Northwell Healthcare Inc., a health system of more than 700 hospitals and outpatient facilities, lost $106.9 million in 2015 due to medical debt. Additionally, acute care and critical access hospitals reported around $55.9 billion lost to debt, according to data by the American Hospital Directory, Inc. Richard Miller, Northwell’s chief business strategy officer, stated that “high-deductible plans have had a very big impact.”
When it comes to reimbursement, there’s a common denominator across the healthcare industry: the out-of-date process in which bills are processed. This includes a complicated snare of medical records, billing systems, health insurance companies and contractors. High deductibles only add to the bureaucracy.
The Trouble With Private Health Insurance Companies
Many times, healthcare providers don’t have real-time, fully accurate information on patient deductibles. Patient deductibles already fluctuate depending on what’s already been paid, and this alone adds much unnecessary time, energy and stress for providers. Today more than ever, providers are constantly being forced to reach out to insurance companies for estimates.
Medical facilities and providers are hiring additional staff members just to deal with bills from patients and their private insurance companies. This is a big expense, especially for medical offices of only seven or eight employees.
According to a study by the Journal of American Medical Association, primary care physicians at academic healthcare systems lose about 15% of their revenue to billing departments and activities, such as calling insurance companies for estimates.
Tarek Fakhouri, a Texas surgeon specializing in skin cancer, deals with this burden.
“It’s an unnecessary added cost to the health-care system to have to hire staff just to sit there on hold with insurance companies to find out what a patient’s deductible status is.” Around 10% of Dr. Fakhouri’s patients need payment plans, delay surgeries until they’ve met their deductibles, or have to choose an alternative treatment altogether.
Doctors and Providers are Leaving Private Practices for Larger Systems Because of Debt Collection Burdens
According to a study by the American Medical Association, less than 50% of all doctors in the US were self-employed as of 2016—the lowest it’s ever been. Many of those doctors and health care providers left their own practices to work for hospitals and large physician groups and systems. Many of those doctors cited better resources as the reason for moving.
To deal with this ever-growing challenge, labs and hospitals across the US are investing millions of dollars in programs designed to help patients understand what they owe at the point of care.
Southwest Recovery Services
We are a nationally-recognized collection agency specializing in medical debt collections. At Southwest Recovery, we abide by the Fair Debt Collection Practices Act and strive to maintain integrity and compassion when dealing with patients in medical debt. We have offices in Dallas, Houston, Austin, San Antonio and Oklahoma City. To learn more or to collect a medical debt, contact us today.