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%.

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 Resources (QHR), using the above assumptions and QHR’s publicly available financial data, bad debt due to patient pay will more than double in five years, dropping QHR’s operating margin from -0.68% to -4.76%.

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

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

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 QHR, resulting in greater patient loyalty to QHR 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
BAD DEBT:  First-year reduction of over $2.0 million; a reduction of more than $15.3 million over five years.
OPERATING INCOME: First-year increase of over $1.5 million; an increase of more than $11.8 million over five years.
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.
A/R DAYS:  Accelerating cash flow will reduce Accounts Receivable by 1.30 days.
DAYS OF CASH ON HAND: Accelerating cash flow will increase days of cash on hand by 1.87 days.
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.
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.
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.
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