Propensity to Pay: It’s All in the Approach
In any situation where a discussion of money is involved, preparation is key. Being able to anticipate what is going to happen and already knowing how to respond is vital for a successful outcome. In healthcare, the patient financial experience can be positive or negative depending on the level of preparedness of both parties involved. Therefore, how do we, as revenue cycle leaders, equip our employees with the right tools so they are prepared to have those difficult conversations with the patients?
Propensity to Pay
One of those tools is “propensity to pay.” Like a credit score, there are systems that can run an algorithm to score patients on how likely they are to pay their bills; 1) do they have the ability to pay and 2) do they pay. Propensity to pay answers these questions and allows the staff to confidently prepare to have the “money” conversation. Having this information helps the staff determine what kind of approach to use with the patients: ask for payment and collect money, look for third party sponsorship or financial assistance, or assign charity.
Steps to Take
To implement propensity to pay, the hospital needs to:
- Determine what type of patients the staff will run propensity to pay on. This decision may depend on how the hospital is paying for the tool, meaning if the cost is per transaction or unlimited.
- Define what the thresholds will be for each segment based on the scores.
- Develop specific workflows for each segment.
- Assign a letter, a color, a symbol, etc. to represent each segment. These will be used to help the staff easily and quickly identify which segment the patient is in and then know what action to take based on the respective workflows created.
Let’s walk through an example. Hospital A wants to make it easy for their patient access staff to quickly identify what kind of conversation they need to have with each patient when asking for money. Hospital A purchases a propensity to pay tool and, due to a per transaction cost, determines that the staff will run propensity to pay on all self-pay patients. They define the thresholds as <300, 300 – 500, and >500. The higher the score, the higher probability the patient has the ability to pay his/her bills and pays his/her bills. The hospital then, for each segment, develops a specific workflow and assigns a color.
Here’s how it looks:
If the propensity to pay score is >500, the system shows the staff the color GREEN meaning that the patient has the ability to pay and does pay his/her bills, so the patient access staff is going to ask the patient for money and collect payment.
If the propensity to pay score is between 300 and 500, the system shows the staff the color YELLOW meaning that the patient does not have the ability to pay but does pay his/her bills, so the patient access staff is going to obtain a signed financial assistance application from the patient, discuss financial assistance options and try to qualify the patient for Medicaid or other third-party sponsorship.
If the propensity to pay score is <300, the system shows the staff the color RED meaning that the patient does not have the ability to pay and does not pay his/her bills, so the patient access staff is going to obtain a signed financial assistance application from the patient and assign charity.
Hospitals benefit greatly from proactively leveraging the knowledge gained from the propensity to pay score. Prior to seeing the patient, the staff can tailor the “ask for payment” based on the patient’s financial situation and present options to help the patient afford his/her healthcare services. Propensity to pay is a must have for hospitals to efficiently and effectively manage the patient financial experience. Other benefits of propensity to pay are increased productivity through streamlined workflows, increase point of service collections, increased self-pay conversions, increased turnaround time for charity approvals, and decreased bad debt. The “money” conversation with the patient does not have to be difficult…it’s all in the approach!
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