Independent physicians will continue wrestling with two long-standing, non-clinical issues in the future: Additional administrative burden and the financial pressure associated with collecting a growing percentage of revenue from patients.
Each area can produce significant costs for a practice: The time consumed juggling paperwork and other administrative tasks can limit opportunities to see patients. And bad debt accumulating due to higher patient deductibles and co-pays can cause major financial challenges over time.
Battling paperwork and bad debt
According to a study published in Health Affairs, American physician practices spend $82,975 per year interacting with payers, nearly four times the $22,205 physicians in Ontario spend dealing with Canada’s single payer agency.1 Another study found that American physicians spend an average of 8.7 hours per week – effectively a full day – on administrative tasks. Not surprisingly, the growing duties are reducing career satisfaction.2
The trend toward higher patient co-pays and deductibles, meanwhile, has been accelerating since the Patient Protection and Affordable Care Act (ACA) took effect. Out-of-pocket expenses in 2016 for the ACA’s “Bronze,” or lowest-premium plans, will reach $6,850 for individual plans and $13,700 for family plans.3
The expansion of high-deductible plans, both through the ACA and more broadly across traditional employer-sponsored health insurance plans, helped contribute to a 14% rise in bad debt between 2008 and 2014 for multi-specialty groups, according to National Public Radio.4 The financial impact on hospitals has been even worse: According to a 2013 J.P. Morgan whitepaper, bad debt from insured patients is growing at 30% annually at some hospitals.5
Technology to the rescue
Managing the twin burdens of expanding administrative tasks and increased patient payment requires clear policies and a robust electronic infrastructure. Tracking and reporting the Physician Quality Reporting System’s (PQRS) mandatory quality measures, for example, demands a system that can automatically pull the necessary information from medical claims or charts.
And because failure to comply with CMS programs like PQRS, Meaningful Use and e-Prescribing now means the implementation of penalties, compliance must be a priority.
As a result, groups should create compliance departments within the organization and dedicate the necessary human resources to the effort. Processes should be implemented to help make sure that the latest rule-making, directive or regulation – be it from CMS or a commercial payer — is promptly disseminated to the appropriate personnel in the group. Mechanisms should also be established to monitor compliance on a regular, if-not-constant basis.
Payment denials also should be tracked to determine the root causes of claims being rejected and appropriate steps should be taken with physicians and/or coders to eliminate non-compliant documentation or coding as quickly as possible.
Alleviating the financial pressure that can result from the growth in self-pay and high-deductible patients also begins with appropriate technologies, policies and procedures. Using automated, real-time systems to verify insurance eligibility, confirm care authorizations, and clarify patient co-pay and deductible responsibilities can go a long way toward eliminating inaccurate or outdated information at the outset of the care episode. Most importantly, collecting some or all payments due from patients upfront is an essential step in limiting patient slow pay or no-pay and reducing bad debt.
A recent study by the Advisory Board Company found that point-of-service collections as a percentage of net patient revenues more than doubled over four years: In FY 2010, the medium institution’s total point of service collection was $700,000; by 2014, that number had reached $1.8 million.6
The Healthcare Financial Management Association (HFMA) recently produced a report outlining best practices for the resolution of medical accounts. Among other things, the report recommends patient-friendly billing statements and continual communications, education and counseling with patients regarding financial expectations and obligations.7
As the regulatory environment becomes more complex and patient self-pay continues to rise, practices may want to explore outsourcing their revenue cycle management. Assuming groups align with a qualified and experienced vendor, outsourcing can improve collections while supporting more rigorous and consistent compliance protocols. This produces not only financial benefits, but just important, peace of mind in an ever-changing healthcare marketplace.
1 Dante Morra, et al, “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting with Payers,” Health Affairs, August 2011,
2 Steffie Woolhandler, Davide U. Himmelstein, “Administrative Work Consumes One-Sixth of U.S. Physicians’ Working Hours and Lowers Their Career Satisfaction,” International Journal of Health Services, 2014,
3 “Bronze Plan – Affordable Care Act,” Health Pocket, Jan. 4, 2016,
4 Jenny Gold, “With Medical Debt Rising, Some Doctors Push for Payment Upfront,” Health News from NPR, April 28, 2014,
5 “Key Trends in Healthcare Patient Payments,” J.P. Morgan Healthcare Banking, 2013,
6 “High-Deductible Health Plans Propel Sweeping Change in How Providers Collect for Care,” The Advisory Board Company, Oct. 28, 2015,
7 “Best Practices for Resolution of Medical Accounts – A Report from the Medical Debt Collection Task Force,” Healthcare Financial Management Association and The Association of Credit and Collection Professionals, January 2014.
The delivery of high-quality care is the No.1 priority for physicians — but quality should be supported by sound financial management. Let’s take a look at four steps you can take to help you understand what is driving the bottom line at your practice. 1. Review basic financial reports and key metrics monthly ...