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Segmenting Hospital Accounts to Maximize Cash

Segmenting Hospital Accounts to Maximize Cash. March 22, 2011 Garett Jackson, CFO HCA National Patient Account Services. Learning Objectives. Understanding the Self Pay Portfolio How predictive models were incorporated into the process

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Segmenting Hospital Accounts to Maximize Cash

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  1. Segmenting Hospital Accounts to Maximize Cash March 22, 2011 Garett Jackson, CFO HCA National Patient Account Services

  2. Learning Objectives • Understanding the Self Pay Portfolio • How predictive models were incorporated into the process • What variables are within the data already obtained from the patient? • Future state of modeling and segmentation • Translating data into results

  3. Benchmark – Evaluate – Segment - Measure Understanding the Self Pay Portfolio

  4. Front-End: Copay Responsibility Shift Insurance plans are paying less of the overall bill. Hospitals are left to get the remaining portion from the patient. Gains upfront are not offsetting the increase in responsibility

  5. Front-End Efforts – Self Pay More of the original balance was discounted. Front-end collections from the patient are decreasing at the same time.

  6. Economic Conditions Have Changed

  7. Last Fifteen Months

  8. Negotiation: What to Expect 82% of SP calls don’t commit to pay

  9. Collections Life Cycle Bad Debt Collection Agency Payment from credit reporting Payment from legal actions Payment from aggressive collection activity Identified as collection agency Back Office (Early Out) Payment from letters Payment from contacts Payment from re-billing Customer Service Focus Identified as Facility Front End Collections Pre-admit payments Payment at registration Payment at discharge Payment from billing Mission Based Collection Practices NPAS Statistics

  10. HCA’s Bad Debt Action Plan • HCA started implementing its Bad Debt Action Plan in an effort to understand and attack the issue quickly. Early out was a key focus of the plan: • What does the healthcare portfolio look like compared to other industries? • Is it possible to change the early-out collection strategy to address the portfolio? • Which resources (up-front, early-out, primary) are best equipped to handle the inventory? • Which key indicators have the largest impact on collections?

  11. Credit Scoring Notes Used the Equifax ERS 3.0 scoring method, which ranges from 1 to 1000 Grouped number of accounts in scored index ranges of 100 Scores of 0 mean that no data was available Scoring vendor provided six industry comparisons done by Equifax Compared results against All Industries, Auto Finance, and Bankcard Industries Work Effort is defined as Attempts, Contacts and Letters Self Pay was analyzed for comparative purposes. However, the study compares Copay and Deductible in general. Scoring vendor provided scores for approximately 241k accounts with a 96% score rate Used a random sample of closed accounts Statistical accuracy of sample is 95% +/- 4% as a valid representation of our inventory

  12. Early Out Inventory

  13. Upfront Collection Efforts

  14. Copay/Deduct – Group MixComparison of Net Placements and Recovery

  15. Self Pay

  16. Self Pay - Emergency Room

  17. Self Pay - Inpatient

  18. Self Pay – Outpatient

  19. Self Pay - Surgery

  20. Incorporating Predictive Results

  21. Self Pay – Work Effort

  22. Credit Scoring Flow (Self Pay)

  23. Copay and Deductible

  24. Credit Scoring Flow (Copay and Deductible)

  25. Results: The Reason for Scoring

  26. Results: Credit Scoring Segmentation

  27. Keys to Implementation of Scoring • Tools: Do you have the right tools to manage workflow with a score? • Workflow: Determine what will be done with the score ahead of time • Segmentation: What accounts will be scored? Cost can be an issue. • ROI: What will happen to FTEs that might be working these accounts? • Risk Tolerance: There will be accounts that are not correctly predicted • Board Acceptance: Charity and Bad Debt processes require approval

  28. Evaluate – Adjust – Confirm - Predict Key Performance Indicators

  29. Key Performance Indicators

  30. Credit Scores vs Recovery

  31. Balance Size vs Recovery Rate

  32. Key Indicators Cont’d

  33. Key Indicators Cont’d

  34. Goals of Predictive Modeling • Utilize the right resources for working accounts • Minimize the need for external information to determine the best segmentation philosophy • Business Analytics – will a predictive model support a conclusion driven by something other than data?

  35. How to Use a Predicted Value Prediction Category Predict Probability

  36. Cost-Reliability of Models Timing Relevance Data Relevance

  37. Ideal Predictive Workflow Prediction Made

  38. HCA’s Results - Measuring Success Secondary Champion-Challenger with BPO partner. Used same technology and same processes, but BPO allowed to hire, train and manage own staff. Result: HCA processes performed 18% better than the BPO on an alpha-split champion challenge over a one year period. Of the 40% Lift over external vendors, HCA can attribute 18% to people management, or roughly 45%.

  39. Questions? • National Patient Account Services 2700 Blankenbaker Pkwy Ste 100 Louisville, KY 40299 • www.npasweb.com • 1-866-882-3582 • Garett Jackson, CPA • Chief Financial Officer • Garett.jackson@hcahealthcare.com

  40. Identify – Understand – Overcome - Negotiate Overcoming Objections

  41. Balanced Scorecard – Incentive Plan

  42. Balanced Scorecard - Unit

  43. CSPs must Overcome Objections • Reasons Why People Object: 1.Avoidance 2. Confusion 3. WIIFM • Types of Objections 1. Feeling 2. Fact 3. Hidden • Remember the six steps to overcome objections: 1. Listen 2. Empathize 3. Explore and Probe 4. Agree 5. Playback 6. Solve

  44. Negotiating for Money THE MOST MONEY AS QUICK AS POSSIBLE • Make sure you are not automatically setting due dates out 30 days • Post Dated/Recurring Checks • Balance Resolutions • Explore Non Linear Resolutions • Before issuing a final notice make sure you explore a non linear arrangement. Ask probing questions! It’s possible that the customer’s current situation may only be temporary • Negotiate! • Statistics show that 97% of the cash collected comes from accounts that pay in full. • Settlement offers do not have to automatically be max % • Negotiate in increments • Sixty months is not always the right amount of time • Make sure that 60 months is your last option! • Remember this option exists only as a LAST OPTION

  45. Other Payment Sources • Selling A/R • Cash infusion for best credit accounts only • Ensure a low-cost effort is done prior • Lots of players entering market, some are losing money • Longer Partial Payments • Time/value of money is irrelevant if you don’t receive payment • Collection agencies charge between 10% and 35% • Partially Paid Settlement • Combination of partial payments and settlements • Traditional settlements require a large one-time payment that does not usually help a cash-strapped GN • Negotiation of both what the amount needs to be, and how long to pay it off are the two basic tenets of a financial transaction.

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