Revenue Cycle

Cash collections: Develop a thorough program for your entire team

Patient Access Weekly Advisor, May 23, 2007

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by John Kivimaki

In 1991, Mary Rutan Hospital in Bellefontaine, OH, initiated a cash up-front program to give providers a process in which to maintain bad debt and collect more revenue on self-pay accounts.

Officials scheduled an inservice for the organization's patient accounts employees to educate them about the importance of cash and credit card collections.

It was the first step in developing a cash up-front program, which the hospital has perfected in recent years.

The initial inservice covered why it was important to increase collections. It discussed how patients viewed their medical bills and the dollars tied up to those bills. The staff learned that 90% of the write-offs were outpatient or emergency room accounts.

Staff members had the background they needed to understand the problems, but didn't possess the tools to fix them.

A successful cash up-front program evolved over several years, and Mary Rutan now boasts a unique approach to collections that relies on the entire revenue cycle to build the bottom line through strategic preparation.

Get administration's buy-in

There are a number of areas to address when getting a cash up-front program off the ground. The first step is gaining your administration's approval.

Be prepared. Break down accounts at registration by payer, showing self-pay volume and dollar amount. Also, show what total dollar amounts are write-offs for the year and what percentage are self-pays.

Explain that a cash up-front program will mean reducing the cost associated with mailing statements and final letters, and using outside recovery companies and precollection services. Up-front collections will also reduce staff members' time in handling accounts. You'll increase cash flow and reduce bad-debt expense.

After you receive approval for your cash up-front program, begin preparing for your initial inservice for your registration staff members.

Train your employees to ask for money at registration

Once your staff members understand how important it is for the organization to collect more money before you render services, the next step is to remind them to ask for it. Mary Rutan developed a self-pay checklist for registrars (see training tool insert).

The checklist reminds staff members to acquire a copy of the self-pay patient's driver's license, if possible. It also specifies other important information to identify, such as insurance information and employment status.

There is also room to jot down any comments that the patients make.

Initially, Mary Rutan found that patients were surprised that registrars were suddenly asking for money prior to services. The patients denied the request for payment with some of the following responses:

  • "You never asked for money before."
  • "I didn't bring my wallet (or purse)."
  • "I can't pay today."
  • "I am disabled."
  • "I am unemployed."
  • "I have no money and no job."
  • "I was involved in an auto accident."
  • "This is ridiculous!"

    At first, registrars weren't prepared to combat these objections. Officials wanted to walk the fine line between an effective cash up-front program and maintaining a positive public image.

    Mary Rutan officials used role-playing to train registrars how to respond to denials. The instructors gave each registrar a handout to review and study. In addition, officials encouraged every registrar to discuss with their supervisor situations in which they had trouble addressing a patient's concern or objection.

    The training stressed the following points:

  • The hospital is a business, just like any other, that needs money to operate. We need to start educating our patients about this topic.
  • We need to get a commitment from the patients about what they will be doing to satisfy their responsibilities for the bill.
  • We also need to realize that people do have financial problems, and that we can give them alternatives to help with these problems.
  • If the registrar can't work something out, have the patient contact our credit and collections area to discuss their account. Hand out the department's business card to the patient.
  • We need to continue to educate our patients about what we expect of them, but we need to accomplish this objective in a caring way. One reason is that many of our patients will be repeat patients in the future.

    As Mary Rutan registrars continued to use the self-pay checklist, officials sent out reminders to assist them in overcoming challenges they might encounter.

    The following are some of those tips:

  • You cannot read copies of drivers' licenses if the copies are too dark, so use a lighter setting on the copier
  • If the patient is self-employed, acquire their business address and any other possible information
  • With out-of-state patients, stress payment in full or at least some partial payment
  • Fill out the self-pay checklist on every self-pay account
  • Ask for money up front for every self-pay account, and get at least a partial payment

    When you start a cash up-front program at your facility, decide what amounts the hospital will pursue. These may include patient deductibles, copays, balance due after insurance pays, self-pay responsibilities only, ER accounts, inpatient accounts, or outpatient accounts.

    All of these can present problems in determining what the patient owes. When you ask for money up-front, patients will pay only if they think they owe what you are asking.

    Patient deductibles on any account are difficult to determine, since other care providers may not have submitted previous bills before the patient came to your facility. Balance after insurance is another headache to figure out.

    Unless you can access the insurance company's records online, you will not be able to convince the patient of what he or she owes.

    At Mary Rutan, registrars ask self-pay patients for the money. There is no argument on what the insurance will pay. The patient knows he or she owes the bill.

    Registrars also collect for noncovered services. For the most part, registrars have very little objection from these patients.

    Registrars also ask for insurance copays. These co-pay amounts are, for the most part, conveniently located on patients' insurance cards.

    And the most important aspect is that registrars use a soft-sell approach: "Will that be cash, check, or credit card today?"

    Registrars never demand money from the patient.

    Set realistic goals

    To ensure success in this cash up-front endeavor, be sure to do the following:

  • Track payments weekly. Show everyone the results.
  • Initiate an incentive program, if possible.
  • Listen to your staff members for any problems they may encounter.
  • Be enthusiastic and supportive.
  • Build a team approach.
  • Regularly remind staff members about the importance of the program.

    Promote the program

    Most healthcare providers accept credit cards as payment, but surprisingly, some still don't. If yours is a facility that doesn't accept credit cards, it's not difficult to set up a payment system with the four major cards: MasterCard, Visa, American Express, and Discover. Contact your local bank to get more information about how to start.

    There are a number of steps to take to ensure that the credit card program you set up will be a successful one.

    These steps include the following:

  • Accept all the major credit cards.
  • Display credit card logos in highly-visible areas, such as registration, cashier's office, and the business office.
  • Put credit card logos on statements and letters you send to patients.
  • Make it easy for patients to use their credit cards by installing electronic terminals at locations in the hospital. This will speed up payment and balance inquiries.
  • Schedule periodic inservices to educate staff members about the progress of the program and to promote ways to increase credit card payments.

    Consider incentives

    It may be useful to offer incentives to registrars for encouragement and motivation.

    The following are steps Mary Rutan officials took to provide incentives for registrars:

  • Officials established a monthly cash up-front goal
  • From that monthly goal, officials established incentives for reaching it
  • Registrars enter into a computer field the amount of cash he or she collected from each registered patient
  • Officials distribute a weekly report with the cash figures to motivate and encourage registrars to reach their goal
  • Officials pay incentives out monthly

    Mary Rutan sees results

    The following are some of the results Mary Rutan officials have seen on major accounts/receivables (A/R) indicators:

  • Cash collected at registration increased from $0 in 1991 to $70,000 in 2005
  • Credit card payments have increased from $26,000 per year to over $300,000 per year
  • Bad debt decreased from 5.06% to 3.59%
  • Charity write-offs have increased over 200% since Mary Rutan began handing out financial applications at registration
  • A/R over 90 days has decreased from 30.5% to 10.4%
  • A/R days has decreased from 63 days to 38 daysn

    Editor's note: Kivimaki is director of patient accounts at Mary Rutan Hospital.



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