It Pays to Know Patients' Ability to Pay

Want a snapshot of the reimbursement environment in today’s healthcare system? Nancy Davenport-Ennis, founder and CEO of Patient Advocate Foundation (PAF), describes it as lower reimbursement to physicians, hospitals and clinics, with simultaneous higher cost shifting to the individual consumer. “We’ve got the perfect storm,” she says, “and the individual consumer is simply not in a place where he or she can pay those dollars.”

Consider that in 2007, the vast majority of PAF callers, 70.13 percent, reported debt crisis as their first concern, nearly double the 38% rate in 2005 and 2006. Early determination of which consumers can pay and which cannot can save caregivers millions of dollars in administrative and collection costs, according to an article in the Atlanta Business Chronicle. To that end, area hospitals have begun examining patient credit reports to gauge their ability to pay medical bills.

Double-edged sword

Randy Fagin, MD, a Texas-based urologist who specializes in performing daVinci robotic surgery for patients with prostate cancer, understands the benefit to a hospital of knowing a patient’s financial status early on, but says that the clinician in him has some reservations.

“As a physician, not a business person, it bothers me to think that my patients have to bring cash to the door before they can have their cancer surgery done,” says Fagin. “From a business point of view, I understand the necessity of doing that. But as a physician, it just doesn’t sit right.”

Davenport-Ennis sees the potential downside to availability of patient financial information as well. She explains that the more financial information a physician has up front about a patient and their ability to pay, the more that same information may influence the protocol that is ultimately offered to the patient. “Some older protocols are not as effective as some of the newer and more expensive ones,” says Davenport-Ennis. “And we have concrete instances where [having information on a patient’s financial resources] does influence the ultimate treatment decision. So morally, what do we do [about] that?”

Benefits outweigh drawbacks

Davenport-Ennis explains that PAF’s mission is to remove obstacles to accessing healthcare for people who have been diagnosed with a chronic debilitating or life-threatening illness. She also points out that 80 percent of PAF’s “patients” are insured consumers. “That’s usually startling for most people to realize, because we think that in America, if you have health insurance, it means you’re going to be able to access healthcare that is prescribed for you. But that is not a fact today.”

The reason for that startling statistic, says Davenport-Ennis, is that every stakeholder in the healthcare delivery system—from hospitals to physician practices and individual consumers—is having more and more of the cost of care off-loaded to them for direct payment. That, she says, is why early knowledge of a patient’s financial situation is knowledge worth having.

“The sooner that all stakeholders can be aware of what is the limit of reimbursement that is going to be available for a particular protocol, for a particular patient, the faster the consumer can work with PAF or others in their community to try to identify resources that can fill the gap,” Davenport-Ennis explains. “The quicker a physician practice reaches out for help, the more it is to the advantage of the patient, and the more likely the practice will be able to move ahead with the treatment protocol the doctor wishes to provide.”

Davenport-Ennis adds that 30 percent of PAF’s patient referrals come directly from hospitals, clinics, and physicians.

Using customer dataThe use of data to predict the likelihood or ability of a consumer to pay for a provided product or service is not new. Eric Hartz, president and CEO of RentBureau, explains that his company’s website combines alternative data (utility payments and club memberships) and consumer data (credit card and rent/mortgage information) to predict the likelihood of rent payments.

“We’ve been at this for about 3 years, and we have more than 5 million records,” says Hartz. “We are seeing, in the apartment industry specifically, net operating income improvements of 1 to 2 percent as a result of decisions made using both consumer and alternative data.”

But trends in healthcare are not as promising. Davenport-Ennis explains that as hospitals are limiting charity write-offs to 50 or 60 percent of the total payment due, it’s very typical to see physician practices in the same community limit their charity care write-offs to the same level, leaving patients stuck in the middle.

“It’s important for doctors to know that there are resources that can help,” says Davenport-Ennis. “And if they feel they’re going to have to make a decision to offer a protocol that is less likely to have a favorable result for their patients, then reach out to those resources.”

Ed Rabinowitz is a veteran healthcare writer and reporter. He welcomes comments at edwardr@ptd.net.