Q&A with TransUnion execs: Patients are the new payers

One of the most frequently discussed topics from the Healthcare Financial Management Association (HFMA) conference was the need to increase patient engagement when it comes to payment as out-of-pocket costs and deductibles continue to rise.

Jonathan Wiik, MBA, principal and lead of revenue cycle management solutions at TransUnion Healthcare, addresses this shift in a new book entitled “Healthcare Revolution: The Patient is the New Payer.” Along with TransUnion’s vice president of healthcare products, John Yount, he sat down with HealthExec at HFMA 2017 to discuss how hospitals should manage this change and whether it’s only a short-term fix.

HealthExec: The title says the patient is the new payer, though a survey you just released also says patients are now more than ever struggling to pay. What kind of impact is this having on the hospitals?

Jonathan Wiik, MBA: The study showed that 68 percent of patients with a bill of $500 or less couldn’t pay it or didn’t pay it. Asking that patient for that $500 financially engages that patient and you can then establish other things, like charity programs. Payer doesn’t necessarily mean that payment’s coming from the patient. It could be coming from the government or the hospital’s charity program. Ideally, it could come from the patient, but it could be from many different sources and establishing those sources upfront is why the patient’s a payer.

The (American Hospital Association) runs a report every year on uncompensated care. Right now, it’s $34.7 billion dollars. That’s a combination of bad debt and charity care. It did go down slightly because of the (Affordable Care Act) and the Medicaid expansion. There are predictions from the Congressional Budget Office and others that with the new healthcare bill, that number will actually rise again.

So that number is representative of bad debt and bad debt is a function not establishing funding mechanisms for patients, either through themselves, the government, their insurance company, whoever it may be. Profitability of the hospital will be detrimentally impacted if payments and financing options aren’t discussed with patients in advance.

Obviously, hospitals have to be paid. What do they need to do to get through to these patients who struggle to pay bills?

Wiik: I think hospitals need to do three things: 1) they need to educate their patients to the cost of their care, 2) they need to act upon that information once they have it and have a financial conversation with the patient, and 3) they need to enable their staff to have a passionate, collaborative and competent conversation with the patient.

Right now, most conversations don’t happen. It’s an envelope in the mail, three months later, and most patients when they get it, they’re like “What is this? How come no one talked to me?” That’s exactly what a hospital needs to prevent from happening by pulling that process as early as they can into the revenue cycle and just have financial conservations at every step they can. “Hey, we ran your insurance, you have a $500 deductible, we think it’s going to be about $300, can you afford that? If you can’t, let’s try to find some other financing options.”

How much on this new dynamic depends on getting new data, like identifying patients most likely to be unable to pay in full?

Wiik: I’d say a lot of it. There’s a very large benefit literacy gap in our country. Most folks can’t say what their benefits are. I bet you couldn’t. I’m in the industry and I don’t really know how much of my deductible I met this year. With data, you can know those things.

You can check insurance and find out what those accumulators are—how much is going to be payable from the insurance company or the patient. If there is not insurance, using predictive analytics to find out what’s their household size, what’s their income, and then you can kind of put them in payment lanes, like a patient who has a high likelihood of payment or high likelihood of charity or is in the middle who might need help paying over time.

John Yount: It’s been a big focus of our customers. If you look at what the (ACA) did around Medicaid expansion, there’s now a significant portion of the population that has Medicaid, and as a result, they fall under 133 percent of the (federal poverty level) and can be automatically eligible. In the cases where the patients don’t fall in that category, but they’re still under 400 percent, they have the ability to then assess what their financial assistance is or the programs that might be available.

Does this really get at the root of the problem with rising healthcare costs, or is it just sort of a band-aid, a short-term solution?

Wiik: That’s a larger problem—or opportunity, I’ll call it—for our industry to look at. Much of the legislation you’ve seen has addressed access and coverage but not cost. I would argue there has been very little in our industry, other than some of the Medicare programs like readmissions programs, hospital-acquired conditions, to address cost.

You are seeing a fee-for-value movement from fee-for-service, but I don’t think this is just a band-aid. I think it’s not sustainable. The book I wrote talks about how there’s going to be a revolution in healthcare of some sort because we can’t have $50,000 deductibles. That’s not insurance. Very few people have $50,000 in the bank laying around to pay for a hospital bill.

You’re seeing the government start to do some incentives to make health savings accounts very attractive. I think there’s some solutions there where you finance your healthcare internally and kind of take it back as a payer. We do that with every other industry but healthcare seems to have a struggle with that. When we go buy a house or go rent an apartment, there’s this financial preparedness step that doesn’t happen in healthcare very often. I think that’s going to have to start happening, otherwise we’re going to have a lot of financial disaster.

Yount: I would agree with Jonathan that there’s an opportunity to continue to look at programs that are going to move us towards value-based, outcomes-based care. I’d say though there are solutions we could deploy that do help with the cost structure challenges.

When providers have a good conversation at the time of service and they help the patient understand that financial obligation, in addition to it being a good patient experience, they’ve also been able to collect more. The value there, to go back to your original question, it’s not a band-aid. It’s a real solution. It solves the problem and takes cost out of the back end of healthcare, which reduces the administrative fees. There is a broader issue that must be addressed but there are activities and solutions that can be deployed now that do make a difference.