How the rise of high-deductible plans is affecting hospitals

Median point-of-service collection more than doubled between FY 2010 and FY 2014

The growth of high-deductible health plans has created new pressure on hospitals to collect upfront payments, according to a new Advisory Board Company survey, Zack Budryk reports for FierceHealthFinance.

The survey drew on responses from 170 executives at roughly 70 hospitals and health systems, and concluded that between fiscal year (FY) 2010 and FY 2014:

  • The median point-of-service collection per provider more than doubled from $0.7 million to $1.8 million; and
  • The median point-of-service revenue per bed increased from $2,660 in 2010 to $5,780 in 2014.

Point-of-service collections now represent nearly 0.6% of net patient revenue, Carrie Pallardy writes at Becker's Hospital Review, but researchers conclude that hospitals and health systems must increase point-of-service collections to 5% of net patient revenue to sustain financial health.

"This move to collecting payment at or before the point-of-service reflects the industry's experience that as more time passes after care is delivered, a patient's propensity to pay decreases substantially," according to the Advisory Board's Christopher Kerns.

Create a sustainable culture of upfront collections

At Houston Methodist, a seven-hospital health system based in Texas, annual point-of-service collections grew by more than $20 million between FY 2010 and FY 2014.

"By using data and analytics, we improved the process for point-of-service collections, and currently collect close to 40% of total patient payments at the point of service," said Scott Ulrich, the system's director of revenue cycle operations.

"The trend toward patient responsibility for large portions of their care is increasing, which makes it much more important to provide patients with detailed billing information so patients can make informed choices about their care" (Advisory Board release, 10/28; Budryk, FierceHealthFinance, 10/28; Pallardy, Becker's Hospital Review, 10/28).


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