The Patient Pay Problem – Consequences and Solutions

The Patient Pay Problem refers to the payment obligations of both an uninsured and an insured patient’s balance after insurance (BAI).

While the promise of the Affordable Care Act (ACA) is to significantly reduce the uninsured population, it has also accelerated the growth of high deductible health plans (HDHPs).

The ACA’s Bronze Plan sets the new HDHP standard – the insurer pays 60% of the cost while the consumer is responsible for the remaining 40% (with an average annual deductible of $4,300).  With the ever-increasing cost of individual healthcare procedures factored in, the combined result is that many organizations are projecting patient pay obligations (primarily from BAI) to grow at an annual rate of 20%[1].

The Consequences of the Patient Pay Problem

  • The revenue mix between insurance and patient pay is shifting (insurance lower, patient pay higher).
    • 2015 – 96.0% payer / 4.0% patient
    • 2020 – 91.7% payer / 8.3% patient (assumes annual growth in patient pay of 20%)
  • The cost to collect patient pay is significantly higher than the cost to collect insurance
  • The collection rate on patient pay is significantly lower than for insurance collections. On average:
    • 0% from payer
    • 0% from patients
  • Consumers are more price-conscious and are putting off care when they can’t “afford” the cost. This results in reduced volumes for in-patient non-emergent care and shifting volumes to the outpatient setting, all of which is putting downward pressure on overall revenue growth.

If the patient pay problem is left unaddressed by Quorum Health, using the above assumptions and Quorum Health’s publicly available financial data, bad debt due to patient pay will more than double in five years, dropping Quorum Health’s operating margin from -0.68% to -4.76%[2].

“The Problem” Effect of increasing HDHPs and Patient Pay AR

The Patient Pay Problem Effect of increasing HDHPs and Patient Pay AR Graph

The Potential Solution

Offering consumers a flexible, interest-free, revolving line of credit will attract consumers to your facility and drive higher net recoveries.

Key Solution Criteria

  • Provide a patient experience that encourages high levels of payment and satisfaction with Quorum Health, resulting in greater patient loyalty to Quorum Health and increasing census (new census that is collectible).
  • Provide superior collection rates.
    • Greater collections reducing bad debt and improving the bottom line
    • Competitive pricing (absolute value and how those prices translate to net cost)
    • Reduced internal costs
  • Provide high levels of adoption by patients who previously went to bad debt because they were
    willing but unable to pay using the options provided:

    • Easy for Quorum Health’s staff to offer while still meeting collection goals
    • Easy for patients to qualify, participate and complete their obligations
  • Accelerate cash flow, thereby increasing days cash-on-hand and reducing days in AR.


Potential Value for Quorum Health with the ClearBalance Solution

Quorum-Purchasing-Advantage-down-arrow patient pay problem BAD DEBT:  First-year reduction of over $2.0 million; a reduction of more than $15.3 million over five years.
Quorum-Purchasing-Advantage-up-arrow patient pay problem OPERATING INCOME: First-year increase of over $1.5 million; an increase of more than $11.8 million over five years.
Quorum-Purchasing-Advantage-up-arrow patient pay problem CASH FLOW: Patient balances will be funded, increasing first-year collections by more than $6.8 million and enabling your staff to meet and exceed collection goals.
Quorum-Purchasing-Advantage-down-arrow patient pay problem A/R DAYS:  Accelerating cash flow will reduce Accounts Receivable by 1.30 days.
Quorum-Purchasing-Advantage-up-arrow patient pay problem DAYS OF CASH ON HAND: Accelerating cash flow will increase days of cash on hand by 1.87 days.
Quorum-Purchasing-Advantage-up-arrow patient pay problem PATIENT SATISFACTION: Improved repayment options with all patients immediately qualifying for an affordable monthly payment solution minimizes patient’s financial concerns so they can focus on their health.
Quorum-Purchasing-Advantage-up-arrow patient pay problem EMPLOYEE SATISFACTION: Your staff will appreciate the opportunity to help patients pay their obligations with a truly patient-friendly option to pay over time that is easy to offer, set up and qualify.
Quorum-Purchasing-Advantage-up-arrow patient pay problem PHYSICIAN SATISFACTION: Your physician practices will appreciate the option for patients to combine bills into one easy payment managed by ClearBalance and receiving their cash up front.

[1] McKinsey Quarterly, “The Next Wave of Change for US Health Care Payments”; The Advisory Board Company “The  Future of Uncompensated Care” March 2014

[2] Definitive Healthcare (