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©2007 NPAS1 Segmenting Hospital Accounts to Maximize Cash March 22, 2011 Garett Jackson, CFO HCA National Patient Account Services
©2007 NPAS2 Learning Objectives Understanding the Self Pay Portfolio How predictive models were incorporated into the process What variables are within the data already obtained from the patient? Future state of modeling and segmentation Translating data into results
©2007 NPAS3 Understanding the Self Pay Portfolio Benchmark – Evaluate – Segment - Measure
©2007 NPAS4 Front-End: Copay Responsibility Shift Insurance plans are paying less of the overall bill. Hospitals are left to get the remaining portion from the patient. Gains upfront are not offsetting the increase in responsibility
©2007 NPAS5 Front-End Efforts – Self Pay More of the original balance was discounted. Front-end collections from the patient are decreasing at the same time.
©2007 NPAS6 Economic Conditions Have Changed
©2007 NPAS7 Last Fifteen Months
©2007 NPAS8 Negotiation: What to Expect 82% of SP calls don’t commit to pay
©2007 NPAS9 Collections Life Cycle Front End Collections Pre-admit payments Payment at registration Payment at discharge Payment from billing Back Office (Early Out) Payment from letters Payment from contacts Payment from re-billing Customer Service Focus Identified as Facility Collection Agency Payment from credit reporting Payment from legal actions Payment from aggressive collection activity Identified as collection agency Bad Debt NPAS Statistics Mission Based Collection Practices
©2007 NPAS10 HCA’s Bad Debt Action Plan HCA started implementing its Bad Debt Action Plan in an effort to understand and attack the issue quickly. Early out was a key focus of the plan: –What does the healthcare portfolio look like compared to other industries? –Is it possible to change the early-out collection strategy to address the portfolio? –Which resources (up-front, early-out, primary) are best equipped to handle the inventory? –Which key indicators have the largest impact on collections?
©2007 NPAS11 Credit Scoring Notes Used the Equifax ERS 3.0 scoring method, which ranges from 1 to 1000 Grouped number of accounts in scored index ranges of 100 Scores of 0 mean that no data was available Scoring vendor provided six industry comparisons done by Equifax Compared results against All Industries, Auto Finance, and Bankcard Industries Work Effort is defined as Attempts, Contacts and Letters Self Pay was analyzed for comparative purposes. However, the study compares Copay and Deductible in general. Scoring vendor provided scores for approximately 241k accounts with a 96% score rate Used a random sample of closed accounts Statistical accuracy of sample is 95% +/- 4% as a valid representation of our inventory
©2007 NPAS12 Early Out Inventory
©2007 NPAS13 Upfront Collection Efforts
©2007 NPAS14 Copay/Deduct – Group Mix Comparison of Net Placements and Recovery
©2007 NPAS15 Self Pay
©2007 NPAS16 Self Pay - Emergency Room
©2007 NPAS17 Self Pay - Inpatient
©2007 NPAS18 Self Pay – Outpatient
©2007 NPAS19 Self Pay - Surgery
©2007 NPAS20 Incorporating Predictive Results
©2007 NPAS21 Self Pay – Work Effort
©2007 NPAS22 Credit Scoring Flow (Self Pay)
©2007 NPAS23 Copay and Deductible
©2007 NPAS24 Credit Scoring Flow (Copay and Deductible)
©2007 NPAS25 Results: The Reason for Scoring
©2007 NPAS26 Results: Credit Scoring Segmentation Copay and Deductible -Low Score <$1,000 % Change Net back %+0.47% Average Attempts-91.64% Average Contacts-65.96% Average Letters-30.52% Age at NPAS-34.38% Self Pay -Low Score <$1,000 % Change Net back %1150.0% Average Attempts-88.66% Average Contacts-65.96% Average Letters-4.02% Age at NPAS-17.10%
©2007 NPAS27 Keys to Implementation of Scoring Tools: Do you have the right tools to manage workflow with a score? Workflow: Determine what will be done with the score ahead of time Segmentation: What accounts will be scored? Cost can be an issue. ROI: What will happen to FTEs that might be working these accounts? Risk Tolerance: There will be accounts that are not correctly predicted Board Acceptance: Charity and Bad Debt processes require approval
©2007 NPAS28 Key Performance Indicators Evaluate – Adjust – Confirm - Predict
©2007 NPAS29 Key Performance Indicators
©2007 NPAS30 Credit Scores vs Recovery
©2007 NPAS31 Balance Size vs Recovery Rate
©2007 NPAS32 Key Indicators Cont’d
©2007 NPAS33 Key Indicators Cont’d
©2007 NPAS34 Goals of Predictive Modeling Utilize the right resources for working accounts Minimize the need for external information to determine the best segmentation philosophy Business Analytics – will a predictive model support a conclusion driven by something other than data?
©2007 NPAS35 How to Use a Predicted Value Total PopulationWon’t Pay Low: 99% to 75% Sure 90% P = (1-.90)*1000 = 100 Score 80% P = (1-.80)*1000 = 200 Score Med-Low: 75%-50% Sure 60% P = (1-.60)*1000 = 400 Score 50% P = (1-.50)*1000 = 500 Score Will Pay Med-Hi: 50%- 75% Sure 50% P = (.50*1000 ) = 500 Score 60% P = (.60*1000 ) = 600 Score High: 75%- 99% Sure 80% P = (.80*1000 ) = 800 Score 90% P = (.90*1000 ) = 900 Score Prediction Category Predict Probability
©2007 NPAS36 Cost-Reliability of Models Final Notice Initial Phone Contact Initial Letter Placement Credit Score Prior Payment History Balance Size Financial Class Patient Type Timing Relevance Data Relevance
©2007 NPAS37 Prediction Made Ideal Predictive Workflow
©2007 NPAS38 HCA’s Results - Measuring Success Secondary Champion- Challenger with BPO partner. Used same technology and same processes, but BPO allowed to hire, train and manage own staff. Result: HCA processes performed 18% better than the BPO on an alpha-split champion challenge over a one year period. Of the 40% Lift over external vendors, HCA can attribute 18% to people management, or roughly 45%.
©2007 NPAS39 Questions? National Patient Account Services 2700 Blankenbaker Pkwy Ste 100 Louisville, KY 40299 www.npasweb.com 1-866-882-3582 Garett Jackson, CPA –Chief Financial Officer –Garett.firstname.lastname@example.orgGarett.email@example.com
©2007 NPAS40 Overcoming Objections Identify – Understand – Overcome - Negotiate
©2007 NPAS41 Balanced Scorecard – Incentive Plan Weighted Factors Gold, Silver, and Bronze payouts on bonus points Bonus Points – 70% measuring efficiency and effectiveness of CSP 30% - Other quality measures Red figures are below team avg (coaching opp.) RED LINE: Must be above to bonus
©2007 NPAS42 Balanced Scorecard - Unit Unit Performance Index Accumulated unit averages from bonus plan monthly with same weightings Ranked over prior year and previous months Index above 1.000 means better than average performance of other months Incentivize Managers to increase results
©2007 NPAS43 CSPs must Overcome Objections Reasons Why People Object: 1.Avoidance 2. Confusion 3. WIIFM Types of Objections 1. Feeling 2. Fact 3. Hidden Remember the six steps to overcome objections: 1. Listen 2. Empathize 3. Explore and Probe 4. Agree 5. Playback 6. Solve
©2007 NPAS44 Negotiating for Money THE MOST MONEY AS QUICK AS POSSIBLE Make sure you are not automatically setting due dates out 30 days Post Dated/Recurring Checks Balance Resolutions Explore Non Linear Resolutions Before issuing a final notice make sure you explore a non linear arrangement. Ask probing questions! It’s possible that the customer’s current situation may only be temporary Negotiate! Statistics show that 97% of the cash collected comes from accounts that pay in full. Settlement offers do not have to automatically be max % Negotiate in increments Sixty months is not always the right amount of time Make sure that 60 months is your last option! Remember this option exists only as a LAST OPTION
©2007 NPAS45 Other Payment Sources Selling A/R –Cash infusion for best credit accounts only –Ensure a low-cost effort is done prior –Lots of players entering market, some are losing money Longer Partial Payments –Time/value of money is irrelevant if you don’t receive payment –Collection agencies charge between 10% and 35% Partially Paid Settlement –Combination of partial payments and settlements –Traditional settlements require a large one-time payment that does not usually help a cash-strapped GN –Negotiation of both what the amount needs to be, and how long to pay it off are the two basic tenets of a financial transaction.
©2007 NPAS1 Garett Jackson, CPA Segmenting Hospital Accounts Based on Likelihood of Payment Using Predictive Models.
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