Industry Voices—Want to save rural hospitals? Try fixing the patient's financial experience

Patient financial obligations are the fastest-growing share of hospital receivables. This fact, coupled with rural hospitals’ pressing challenges, make it imperative for executives to change the patient's financial experience, and quickly. (Getty/OgnjenO)

Running a rural hospital is a tough job. It’s hard to find good talent, costs keep going up and younger people are moving to urban areas, reducing rural populations.

Patients who are left tend to be older and heavily reliant on Medicare and Medicaid, resulting in lower reimbursements and higher uncompensated care. Many rural hospital executives, faced with these challenges, the weight of increased regulation and a shift to value-based care, have been forced to give up the fight and watch their institutions close.

Between 2005 and 2012, an average of seven rural hospitals in America closed each year. Since 2012, the closure rate doubled to almost 14 per year.

All told, 155 rural hospitals have shut their doors since 2005, sounding the alarm in Congress, at the Centers for Medicare & Medicaid Services (CMS) and within advocacy groups around the country. Fortunately, action is underway. CMS is testing new care models as part of its Rural Health Strategy. Legislation to improve payment and delivery models for rural hospitals has been introduced.

The American Hospital Association’s Rural Advocacy Agenda focuses on ensuring fair reimbursement, removing red tape, bolstering the rural hospital workforce and pushing other investments (PDF) forward in rural communities.

RELATED: These states have the most rural hospitals at 'high risk' of closure: report

While efforts like these are commendable, time is running out for rural hospitals on the brink.

Administrators in many facilities have already tried cutting expenses, deferring maintenance and postponing equipment purchases. Some have eliminated money-losing departments, laid off staff and asked for taxpayer help. Still, almost half of rural hospitals are in the red, and, unless their finances improve dramatically, another 21% are considered at high risk of closing.

The path to sustainable solutions

Despite the urgency of the rural hospital dilemma, quick, temporary fixes are not the answer. Administrators need sustainable solutions to help them right the financial ship immediately and continually improve operations over the long term. One approach that’s working in hospitals across the country is to change the patient financial experience to reduce uncompensated care and increase patient collections. 

Step 1: Know your patients

Patient experience is a hot topic for all healthcare providers, with financial services increasingly influencing patient perceptions. Rural hospital leaders, however, must approach financial solutions with their unique audience in mind. Rural consumers tend to have less internet access and cellphone connectivity, making it harder for them to find and understand insurance and what they may qualify for. Many are on Medicare or Medicaid and can churn between eligibility and ineligibility, leaving hospitals to pick up the slack if patients have gaps in coverage.

People in small, rural markets who need commercial health insurance often find their only options come with high deductibles and premiums they can’t afford. As a result of these issues, almost 10% of rural residents lacked any kind of insurance in 2017. Financial insecurity adds to the stress. Almost half of rural Americans say they couldn’t pay an unplanned $1,000 expense in full immediately. Forty percent have struggled to pay their medical bills, and 45% went without healthcare because they didn’t have the money (PDF).

Step 2: Create a new financial experience

“No surprises” should be a central theme for rural hospitals who want to change the patient financial experience to increase collections and reduce uncompensated care. A solid strategy starts with streamlined, patient-friendly preregistration. Registration staff should contact patients before appointments to verify insurance eligibility, deductibles and copayments as well as to provide bill estimates so patients know what they’ll owe before they receive care.

Financial assessment tools are available to help staff determine patients’ likelihood and ability to pay, which can guide them to find or customize an appropriate payment plan and increase the hospital’s chances of collecting the full amount they’re owed.

RELATED: AHA: Rural hospitals facing growing challenges to financial stability

Especially critical to rural hospitals looking to reduce uncompensated care are patient advocates who work with uninsured and underinsured patients. There are dozens of federal, state, local and third-party medical benefit programs that many families are not aware of. Experienced advocates know how these programs work, who’s eligible and how to access benefits. They can help patients navigate the system to optimize benefits and financial care plans, ideally at no charge to the patient.

Step 3: See better results

Patient financial obligations are the fastest-growing share of hospital receivables. This fact, coupled with rural hospitals’ pressing challenges, make it imperative for executives to change the patient's financial experience, and quickly.

Taking steps to streamline patient registration, expand financial services and provide advocates for uninsured patients can increase collections and reduce charity care, bad debt and accounts receivable relatively painlessly. Better results like these could be the light at the end of the tunnel that rural hospital execs are looking for. 

David Shelton serves as CEO for PatientMatters.