A survey of healthcare organizations reveal that less than one-in-10 will be able to recover more than 20% of their outstanding unpaid bills from patients, and those organizations know exactly whom to blame: insurance reform.
Nearly 60% of the survey’s respondents say changes in healthcare insurance, such as higher copays and deductibles, are the biggest cause of bad debt. Only 17% of the respondents blamed bad debt on a patient’s delinquency. The survey of 100 executives was conducted by Sage Growth Partners on behalf of Dorado Systems.
“Bad debt is an industry-wide issue that has only grown increasingly more challenging in the last five years,” said Dan D’Orazio, CEO of Sage Growth Partners. “While external factors like insurance reform have compounded the problem, it’s important for leaders to talk about this issue strategically with their teams, and to remember that there are steps they can take to mitigate bad debt.”
Half of the organizations that were surveyed said they expect to recover up to 10% of their outstanding bad debts, while 41% expect to recover between 10% and 20%. Only 9% expect to recover more than 20%.
As for the amount of bad debt at the companies, 64% reported it was less than $10 million. Twenty percent said it was between $10 million and $30 million, 10% said it was between $30 million and $50 million, and 6% said it was more than $50 million.
“Leaders can understandably feel like they don’t have control over bad debt and blame it on external factors, but unless they’re already rechecking insurance every day, it’s likely that there’s more they could be doing,” said Edward Kennedy, CEO of Dorado Systems. “We commissioned SGP to conduct this survey to better understand the extent of bad debt, leaders’ perception of its causes, and what they are doing about it. Recovering 10% of bad debt is a conservative estimate, so it was interesting to note that a full half of respondents believe only up to 10% of their bad debt is recoverable. With bad debt topping $10 million for more than a third of respondents, this is a significant amount of money being written off. Whether it’s through internal processes or external partners, provider organizations should take proactive actions to ensure they get paid as much as possible for the care that was provided.”
About half of those who were surveyed said they are using a third-party vendor to help with bad-debt recovery. Surprisingly, 21% said they are using neither a third-party nor an in-house process to try and collect on unpaid debts.
