Self Pay Revenue Cycle Metrics For Measuring Success:
Every year hospitals and health systems spend huge amounts on operating platforms, clinical improvements and top-level financial improvements designed to optimize and streamline work by analyzing data. However, few hospitals are using data analysis to improve their self pay management process and, as a result, their hospital revenue cycle metrics.
When hospitals track the numbers and quantify their data, self pay management is rife with opportunities for additional savings. But with the explosion of data in the healthcare revenue cycle field over the past decade, it can be difficult to know which data is key to optimizing your revenue cycle.
There are three critical revenue cycle metrics that can be used to measure success in self pay management, as well as several key performance indicators (KPIs) within these three categories.
1. Conversion on self pay accounts
Ideally, the goal is to convert self pay patient accounts into revenue generation. A successful conversion usually takes the form of an assistance program, primarily Medicaid. But accounts can also be classified as financial assistance, which gives hospitals ancillary benefit under the category of community benefit.
If these accounts are not converted into one of these forms, they will go to collections and most likely get written off, leading to bad debt. When measuring success in self pay account conversion, there are several KPIs to track.
- The number of accounts eligible for screening There are rules specific to each hospital as to which accounts can be screened and which cannot be screened. For example, if you have 100 self pay accounts that came in within the month and your team got in touch with 50 people who were unresponsive to screening or accounts were not able to be screened for another reason, then you have a conundrum: Do you leave these accounts in the mix, label them as “not eligible for screening” or another solution? Different facilities have different approaches in deciding what classifies an account as eligible for screening. Track the reasons why accounts could not be screened and look for patterns. For example, if there is an increase in ineligible accounts because patients are not answering you, you may need to adjust your process for reaching out to patients or collecting contact information.
- Screening percentage
Now that you know how many accounts were eligible for screening, how many of them did your team or vendor actually interview and screen? The higher the percentage screened each month the better.
- Screening percentage
- Conversion rate
After screening, this metric measures how many accounts were converted to financial assistance (like Medicaid) or charity. The higher the percentage converted the better.
- Conversion rate
- Pending percentage
At the end of the month, what percentage of eligible accounts are left pending resolution? That is, how many accounts were eligible for financial assistance but did not end up fully entering the program.
Measuring success in this category is dependent on your operation’s size and capacity. Success does not look the same in every facility, and the best way to measure it is by tracking your pending percentage overtime and looking for consistency. If your pending percentage starts to climb, it may be an indication of an underlying issue with your screening process that should be explored. This issue may be something that can be improved internally, or it may be an external factor. For example, the adjudicating Medicaid agency may have a significant backlog that delays decisions. This is an external factor you cannot control.
- Pending percentage
- Ineligibility percentage
This metric measures how many accounts were screened but are ultimately not eligible for a financial assistance program. These accounts may be eligible for payment plans to sent to collections. Your ineligibility percentage is completely out of your control, but it’s a good metric to track to better understand your bottom line and where your resources are going each month.
2. Time to conversion
The second element of success in optimizing self pay accounts is the time it takes to complete the process from identifying a self pay account to receiving payment. There are several trigger points within this process that can be timed separately.
- Screen to submit
From the moment when someone was screened, how long did it take to get the information needed to submit their application for financial assistance?
- Submit to approval
From the moment the application was submitted, how long did it take to be approved?
- Approval to payment
From the moment the patient was approved, how long did it take the hospital to receive the revenue?
When measuring success at each of these trigger points, you face a good amount of variance depending on document requirements, turnaround times and other obstacles. There is no “right” timeline, but you should track how long it takes to move from step to step in the process and look for variation. If your accounts usually convert from approval to revenue within 35 days and suddenly that number averages to 55, you know something is wrong. Whether that’s an internal error or a slowdown with the adjudicating agency is for your team to discover.
The one thing you remain in control of is how long it takes to contact a patient after medical services are provided. Self pay accounts age out quickly, and the further away you are from the date of service, the less likely the patient is to respond to give you the information needed for screening. Optimize your process to make sure self pay patients are contacted as quickly as possible to set the process up for success.
3. Cost of conversion
When it comes to self pay accounts, there are two options for management: Paying a third party vendor to manage the accounts for you, or paying your own staff to work on these accounts. Typically, when a hospital uses a third party vendor, they’re paying based on a contingency fee, meaning they pay based upon the effectiveness of the vendor and they face variable costs. The more accounts converted, the higher the fee.
When a hospital handles self pay accounts in house, they face more fixed costs, including the cost of their technology or internal system, staff salaries, etc. The more efficient the in-house process, the more upsides the hospital sees as opposed to third party vendors where the more efficient they are, the more costs the hospital sees.
With contingency fees also comes an unbalance. While it’s virtually the same amount of work to approve a high cost surgery and a small, sutured wound for financial aid, the third party vendor receives more funding for the high cost surgery, and the hospital must pay more for the same amount of work to approve a small wound. This significant variability can be the proverbial straw that breaks the camel’s back for many larger health systems or trauma centers.
Knowing your cost of conversion does not necessarily provide an indicator of success, but tracking this data can help you better understand whether or not you should outsource the conversion process. Lower volume of patients and lower dollars, as is found in smaller, community hospitals, may save more without the fixed costs that come with in-house management. Trauma centers and hospital systems, on the other hand, tend to handle management in house to avoid the high contingency fees that come with higher patient volume and more complicated cases.
From a comparative standpoint, tracking the metrics surrounding your current system can help inform future decisions about moving the process in-house or outsourcing it. If you’re currently handling conversions in-house, measure the cost of staff salaries, internal software and average revenue from converted self pay accounts in comparison to how much it would cost if you were to give 5-10% in fees to a third party vendor instead. If you’re currently outsourcing, measure the average cost of fees, instead, in comparison to salaried employees and software.
While it’s possible to do the math on this, there are several nuances that cannot be quantified that you may also want to take into account. For example, someone in house may do a better job in general because they’re a part of your in-house team and closer to the action. Success also depends on the nature of the third party vendor you’re looking to employ, including the way they work with your team. If the relationship causes friction, the cost savings may not be worth it.
Tracking healthcare revenue cycle metrics
Minimally, to measure the success of your self pay management, you should be tracking these data points. If you don’t have these metrics available or easily tracked, consider putting a solution in place that’s focused on optimizing your self pay revenue cycle.
Revenue is tight right now, and there are serious challenges going on in the healthcare landscape. If you’re looking to find and use every dollar to your advantage, tighter metrics around your self pay process can help.
The Bluemark MAPS family of solutions brings together all of the functionality needed to convert the self-pay patient population into either reimbursement generating programs or financial assistance in the most effective and efficient manner possible. The suite of functionality includes tools for patient outreach and engagement, core assistance program eligibility and enrollment processing, and patient financial services management tools and reporting.
Learn more about the MAPS family of solutions and enhance your revenue cycle strategy by quantifying success by contacting our team of experts here.