The spread of the novel coronavirus is wreaking havoc on the U.S. economy. Beginning in early March, we’ve seen a rapid sequence of events – from the cancellation of all sporting events, school closures, dine-in restaurant limitations, and social distancing restrictions – the pandemic has caused an upending of life and business as we know it. Within the first weeks of the pandemic’s onset, nearly 20 percent of the nation’s workforce was either newly unemployed or earning less pay.
The U.S. Bureau of Labor Statistics (BLS) reported the unemployment rate skyrocketed from 4.4 percent in March 2020 to 14.7 percent in April, an increase of 10.3 percentage points. For perspective, the number of unemployed Americans grew from 15.9 million to 23.1 million in the month of April.
Even more impacting, the number of unemployed Americans who were unemployed less than 5 weeks rose by 10.7 million to 14.3 million, accounting for almost two-thirds of the unemployed. According to the BLS, this is the highest rate and the largest over-the-month upsurge in seasonally adjusted data going back to January 1948.
According to a recent Department of Labor news release, the number of initial unemployment claims has escalated to approximately 22 percent of the U.S. work-age population. That roughly equates to more than 1 in 5 of all Americans who were employed in February but have subsequently filed for government assistance. Not a single consumer segment appears to be immune from financial hardship triggered by Covid-19.
The Ripple Effect
Many times a job loss comes with the loss of employer healthcare coverage. According to the Commonwealth Fund, about half of the U.S. population is covered by employer health insurance plans. In fact since the devastating impact of Covid-19 began, the Economic Policy Institute expects an estimated 12.7 million workers to no longer have employer-provided health insurance.
How hospitals help patients meet financial obligations during this time of crisis – especially healthcare consumers who are facing unemployment – can be very challenging. Patients are expecting the same consumer experience from their healthcare provider that they receive from other consumer transactions.
Meeting consumer-driven expectations for healthcare services is not an easy task considering hospital and health system revenues have declined abruptly due to the Covid-19 pandemic. With elective surgeries and non-essential medical and surgical procedures canceled or delayed, the AHA estimates a total four-month financial impact – March 1 to June 30, 2020 – of $202.6 billion in losses for health systems and hospitals across the U.S. As a result, many hospitals that were already operating on razor-thin margins are now facing more severe financial challenges.
Congress allocated $100 billion for provider relief in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), with an additional $75 billion in the Paycheck Protection Program and Health Care Enhancement Act. Most recently, the U.S. Chamber of Commerce is calling for immediate action to protect health insurance coverage for Americans during the crisis. However, hospitals don’t have the luxury to wait for government assistance and must act now.
A Personalized Financial Approach
In these unprecedented times, the approach health systems and hospitals take to combat the financial crisis will have a lasting impact on their business and communities they serve for years to come. Although addressing outstanding patient financial obligations is not a new challenge for providers – the need to improve point of service collections has become even more pressing. COVID-19 has led to a decrease in hospital revenue by an average of $1.4 billion per day, according to recent Crowe RCA Benchmarking Analysis.
To meet business goals and patient needs, providers must focus on payment barriers, including inflexible payment options and lack of patient awareness concerning their financial responsibilities. Offering a personalized patient financial experience can help patients meet their financial obligations and increase timely payments. Necessary steps should be implemented now to improve the collection of patient financial responsibility and financial health amid the pandemic.
Assess Ability to Pay
Just like each patient has a unique clinical diagnosis, the financial situation for each patient should also be reviewed on a case-by-case basis. Some patients are able to pay their bills at the point of service (POS). Others require an extended timeframe, and some may never be able to meet their obligation. Hospitals must assess the patient’s ability to pay by going beyond traditional propensity to pay measurements and combine factors such as credit standing, payment history, and residual income to identify different payer group segments.
Offer Personalized Payment Plans
With an understanding of each patient’s financial circumstances, providers should use a structured methodology to identify the most appropriate payment plan for each patient or guarantor. A patient-tailored payment plan results in improved front-end patient cash collections, as well as a positive patient experience.
Provide Clear Patient Communication
Financial conversations can be overwhelming for patients and uncomfortable for registration staff, especially amid COVID-19. Hospitals must train and properly equip staff with the resources to counsel patients on their financial options and establish positive relationships with no financial surprises to the patient.
Patient payments solutions are evolving to make the financial aspects of healthcare easier for both patients and providers. Employing a patient-centric approach to the patient financial experience is essential to efficient, cost-effective, timely healthcare under any situation, and the Covid-19 pandemic has only reinforced this need.