Patient Financing in Today’s Market West Virginia HFMA Winter Educational Conference January 14, 2016 Penny Clair Director of Corporate Training – HealthFirst Financial

The Patient Balance Challenge ACA has changed the landscape of patient balances: Higher Deductibles Higher Premiums Fewer Catastrophic bills Fewer Uninsured but more underinsured 501R Additional Charity Screening Requirements Accounts held longer in-house to ensure screening for charity Compliance Healthcare facilities & third party vendors must adhere to stricter regulation and policies.

The Patient Balance Challenge 58% of Americans are not getting the care they need due to cost. Patient financing increases revenue by providing the public an option that makes care affordable. Percent who say they or another family member living in their household have done each of the following in the past 12 months because of the cost:

Challenge: Reduce A/R days & Bad Debt 35% of non- elderly with private insurance don’t have enough liquid assets to pay their high deductibles Patient financing programs pay providers up-front & reduces your A/R days. Overall providing you with cash and a decrease in bad debt.

Many patient financing programs allow revolving charges to the patient's financing account to avoid the frustration of deciphering bills or working with outsourcing agencies. Most patient financing programs focus on your patients by providing a 24/7 online portal, access to a highly trained customer service staff, and consolidated billing statements. Many patient financing programs can be offered pre-service so the patient know how they can repay their balance ahead of time. Patient financing programs can be offered to patients without requiring a credit check – allowing all patient to qualify can set their minds at ease. Patient Satisfaction

Patient experience with billing and payments play a critical role in patients' overall assessments of providers, the quality of care they receive, and even their decision to seek certain types of care. Nearly 70% of survey respondents who gave the highest ratings to their quality of care over the past two years also gave high ratings to their billing and payment experiences, compared to only 24% of those who gave low ratings to their quality of care.

Healthier Communities Those dealing with significant debt are much more likely to report health problems Patient Financing programs put the mind at ease by allowing the patient to make long-term monthly payments they can afford.

Traditional Payment Plans vs. Patient Financing Sample Acceleration of Cash Flow with patient financing program vs. In-house or Early-out

Impact of a Patient Financing Program on A/R Days Financial Improvement Reduce Bad debt by up to 10% Up to 20% reduction in self-pay A/R Reduce A/R days up to 10 days Patient Programs collect over 83% of the accounts referred. Improve cash flow (Get your money quicker) Staff can focus on other areas rather than long-term follow-up Sales and Margin Improvement Superior Technology Real-time reports Fully transparent Daily reconciliations online All calls recorded and available to forward for Quality Control EDI for uploading new files 835/837 for automatic posting Online portal for real-time viewing of accounts Daily account auditing

Impact of a Patient Financing Program on Patient Loyalty Patient Engagement Improve patient satisfaction with flexible repayment options Patient friendly payment term Regular tracking and follow-up Marketing brings patients back = increase volume Patient are more likely to pay if the payment amount fits within their budget Patients pay a 3 rd party quicker than a healthcare facility Expedite account flow to bad debt for those with no intention to pay

When is a Patient Financing Program Right for your Organization?  Determine your goals: Improve the patient experience Offering an affordable method to pay their medical bills over an extended period of time. Accelerate cash flow through immediate funding of patient accounts Reduce bad debt and future cost to collect Improve patient satisfaction survey results  Determine Primary Requirements for Potential Suppliers: Do you want full funding of patient balance upon approval of loan What interest rates are you willing to consider? You want a financially strong organization Do you want the ability to interface with your systems and automate work flow? Are you open to recourse & non-recourse programs? Do you want a referral basis vs supplier review of all self-pay accounts? Do you want patient loyalty cards? How much impact/involvement from hospital or Business Office staff? What reporting capabilities do you require? What reconciliation capabilities do you require?

Selecting a Patient Financing Partner Collaborate departments (Business office, Patient Access, IT, etc) to choose suppliers that appear to meet the initial requirements. Coordinate RFP process with Sourcing Department Request onsite presentation from finalists Rank suppliers based on presentations and content of RFPs Based on scores, select preferred vendor Sign contract with vendor

Implementing the Program Determine implementation team internally and with vendor – who are main points of contact? Determine implementation timeline Determine Go-Live date How will training be coordinated? Onsite vs. Webinar? IT Resources needed? How will outsourcing vendor be involved/informed? What reporting package will be required to track program success? Outline workflows from different departments. How will POS implementation differ from Business Office implementation?

Impacts of a Patient Financing Program Accelerate Cash Flow Reduce A/R days Reduce Bad Debt Reduce overhead of managing in-house payment plans Patients are more willing to discuss their financial situations Ability to alter program after initial implementation if program success is not as expected.

Tool: Evaluating Your True Cost To Collect Self-Pay Financing Value Proposition Calculator Inputs: Health System From Financial Reporting: Patient Revenue$500,000,000 Self-Pay Revenue %15% Reserve on Self-Pay A/R9%Also known as Reserve for Bad Debt Subjective Analysis: Cost to Collect Self-Pay Revenue %10%This could be internal or outsourced billing and collection Reinvestment Rate5%Reduction of debt, investment in fixed assets, additional operational resources to increase operation margins Self-Pay Revenue % Financed25% Inputs: Self-Pay Financing Company Average Loan Term24 Patient Interest Rate4% Discount %11% Recourse %8% Self-Pay Financing Value Proposition: Annual Loan Volume$18,750,000Patient Revenue x Self-Pay Revenue % x Self-Pay Revenue Financed Annual Benefit Cash Provided by Financing $16,687,500Annual Loan Volume x (1 - Discount %) Reduction in Cost to Collect$1,875,000Annual Loan Volume x Cost to Collect Self-Pay Revenue % Recourse Loans add back($1,335,000) Recoursed Funded Balances: - (Annual Loan Volume x Recourse %) + (Annual Loan Volume x Recourse % x Discount % Reduced Self-Pay Accounts Receivable($1,687,500)Reserve for Bad Debt: - Annual Loan Volume x Reserve on Self-Pay Reinvestment Income$937,500Annual Loan Volume x Reinvestment Rate Free Cashflow $16,477,500Cash to use today for increased profitability! This calculator is for illustration only and does not predict or guarantee the performance of any HealthFirst Financial Product. Past performance is no guarantee of future results. No part of this material may be reproduced in any form, or referred to in any publication, without express written permission of HealthFirst Financial, LLC.

Cost to Collect Calculator

Thank you! Penny Clair Director of Corporate Training – HealthFirst Financial (724)