You need a non-emergency medical procedure that costs about $6,000. Since your insurance plan includes a $6,500 annual deductible, your doctor asks you to prepay for the procedure. What do you do?
It might sound crazy, but it’s not. Situations like this one are happening more often, because consumers are facing higher deductibles in order to afford the monthly insurance premiums, and hospitals and doctors are finding it more difficult to collect the high deductibles.
Many cannot afford to pay the deductible up front. According to a recent survey conducted by Harris Poll for CareerBuilder, 78 percent of workers are living paycheck to paycheck, which is up 3 percent from a year ago.
Now, carry this over to the veterinary profession.
How many times have you been unable to provide the gold standard of care because a pet owner could not pay in full at the time of service? How often has a client delayed or denied treatment because of costs? This happens far too often, and it’s having a drastic effect on the veterinary profession.
With nearly 80 percent of workers living paycheck to paycheck, it’s not surprising that, according to VHMA Monthly Insiders Insights, there has been an average decline in new client visits of 6.2 percent every month for 28 of 31 months between January 2015 and July 2017. How can the veterinary profession continue to thrive with such a dramatic decline in new client visits every month? How can you attract new clients to your practice?
Is the answer in how human medicine is handling a similar problem?
The human health care industry has recognized that when patients cannot afford to pay for procedures at the time of recommendation, conditions can worsen over time, which ends up costing the consumer more in the end. Hospital debt has increased significantly since the Affordable Care Act was implemented.
According to a recent Reuters article by Jilian Mincer, “The trend is expected to accelerate this year because unpaid bills are creating massive bad debt for even the most prestigious medical centers. U.S. hospitals had nearly $36 billion in uncompensated care costs in 2015, according to the industry’s largest trade group, a figure that is largely made up of unpaid patient bills.”
The same report noted that 45 percent of Americans polled would have a hard time paying an unexpected $500 medical bill. And, a survey from gobankrates.com showed that 69 percent of consumers have less than $1,000 in savings.
Human hospitals have been offering payment plans for years and are now experimenting with prepayment options for their patients. That’s where outsourced companies offering interest-free loans and payment plans have entered the picture.
Human health care has realized the need for payment alternatives for their patients in order to meet the changing economic conditions that consumers are facing today. Karen Popa, director of revenue cycle of Munson Healthcare, stated in an article in Beckers Health Care, “From a strategic standpoint, adopting a proactive approach to payment plans positions the organization to succeed as the overall industry demands more and more direct payment from its consumers.”
“The mindset of you need to pay in full at the time of service or you need to pay in full when you get your initial bill has to transform to a more consumer-friendly mindset,” said Jeff Hurst, senior VP of Finance of Florida Hospital/Adventist Health System in an interview with Jacqueline DiChiara of RevCycle Intelligence. “You really need to be a little more flexible in how you’re approaching your patients in terms of those who want to satisfy their responsibility but just need a little bit more time.”
Veterinary practices are facing the same challenges—probably even more challenges—as human hospitals. How many unpaid patient bills are currently on your books? How often has a client had to delay treatment for financial reasons? How many clients have been referred to third-party financing, costing you 5 to 15 percent of your treatment fees? How often have you lost revenue because the pet owner decided not to do the procedure at all? How many clients have you had to turn away because they could not pay in full at time of service? How many appointment slots remain unfilled?
Should the veterinary profession do what human medicine is already doing? There are many benefits to offering your clients more payment alternatives:
- Increased patient visits
- Increase in new clients
- Increased compliance for necessary procedures
- Improved quality of life for animals, pet owners, and the veterinary health care team
But who wants to deal with managing multiple payment options?
You can manage your accounts receivable (A/R) yourself. Gone are the days of stuffing envelopes and mailing statements. Everything is electronic, and there are plenty of software options available. Technology allows you to have many resources at your fingertips to have a successful A/R system. But, if you don’t have the staff to properly manage and follow-up on client bank changes and any missed payments, I would not recommend this option.
The better solution is to outsource you’re accounts receivable, similar to what many human hospitals have done, to a company that has the experience in handling the types of accounts in your profession and will give you and your clients more options and proper customer service. Your clients are more likely to pay a bank or billing company than they are to pay your practice directly. These companies will typically work to collect a debt, while hospitals have traditionally been more relaxed when it comes to debt collection.
Some of the no-interest payment plan companies that hospitals use offer payment plans regardless of a client’s credit score. Hospitals also have total control over the length of time extended.
April York, senior director of patient finance for Novant Health, said in an interview with Jilian Mincer for Health News in April 2017, “To remain financially stable, we had to do something. Patients needed longer to pay. They needed a variety of options.” Since Novant launched their payment plan system they have seen their patient default rate fall from 32 percent to 12 percent because they gave the patient more control of how they pay their bill.
At Wake Forest Baptist Medical Center they noticed that their patients did not realize their deductibles had increased. Wake Forest now asks for payment before non-emergency services plus they offer zero interest, longer term payment plans.
With less than 3 percent of pet owners carrying pet insurance and veterinary prices increasing every year, the veterinary profession must rethink the way it approaches its clients when it comes time to pay if you want to attract new clients. Consider extending payment plans to your clients while still remaining in control. Stop letting the 1 to 5% of potential “deadbeats” stop you from helping the other 95% of pet owners that will pay. If you have open appointment slots, would you not rather have 95% of something than 100% of nothing?
Coupled with implementing wellness plans and offering a prepayment plan system for non-emergency procedures, you can offer client-centric solutions to help many more pets and create tremendous goodwill and gratitude in your community.
All these payment options will generate a recurring revenue stream that is needed in the veterinary profession, and your practice will reap the many benefits associated with a professionally managed accounts receivable.