It’s clear that a company’s assets go far beyond what can be expressed in an accounting ledger.  Some assets aren’t tangible and may not have a static or clear value, and yet are central to the ongoing success of a business. Am I talking about data? Well no, although certainly the security of data and intellectual property is key. More broadly, I’m referring to something you don’t hear too much about in the land of receivables management: brand equity.

The brand of a hospital or physician practice is particularly delicate. A bad healthcare collection effort can sour a perfectly fine clinical relationship, or cause a patient to delay or avoid needed additional care because a trusted physician has sent her/him to collections, and s/he is now embarrassed—or worse, too angry—to go for her preventive care. This domino scenario can lead to potentially bigger problems and ominous bills for a more serious illness down the road.

Of course, clinicians are doing everything possible to get processes in place to avoid this kind of scenario. From making sure patients are screened for charity care eligibility under 501(r) to ensuring adherence to EMTALA, providers are carrying heavy regulatory burdens to protect patients. But even if they can prove they technically complied with the laws, any sort of fumble can risk patient health and an institution’s good name.

This could cause an avalanche of consequences, from a public relations nightmare to a visit from the IRS, who will surely want to do a full audit to find out whether a non-profit hospital’s charity care is at least equal to the value of the property tax exemption the hospital is granted. Who needs investigations like that? No one. I mention this to underscore the fact that in medical collections, damage to a provider’s brand can have very broad repercussions.

Brand Is a catalyst

Why should a receivables management firm care about a healthcare provider’s brand promise? It’s that very connection to the clinical experience that makes brand a catalyst. It makes patients more likely to enter and stick with a payment plan. A desire for continuity of care that encourages many to find a way to pay off an outstanding debt to a valued healthcare provider

In no other vertical is the connection to an original creditor’s brand so personal or intimate. No one waxes nostalgic about breaking up with their cell phone carrier due to an overdue phone bill.  Doctor and patient relationships, however, are less transitory and disposable.  How can we ever replace the bedside manner, patience and thoroughness of a cherished doctor, if we don’t find a way to pay an outstanding bill?

This is actually the main reason that hospitals and physician practices tend not to engage third-party collection agencies. They don’t WANT to send their patients to collections. They’re afraid that any collections effort betrays the relationship they’ve built with their patients, and that the loss of that loyal business will ultimately be more costly than letting some aging bills slide.

Providers understandably hesitant to trade debt risk for reputation risk

We’ve clearly entered a new era in the history of the healthcare revenue cycle. The increase in high deductible health plans (HDHPs) has created an unprecedented amount of unpaid balance bills from people who normally pay their other bills.

Hefty out-of-pocket expense is still not something consumers are used to. They had long paid a health insurance premium, and expected that when they needed care, insurance would cover it in full. There’s a learning curve with HDHPs, and a new, consumer-carried responsibility for the real cost of healthcare, and they’re simply unprepared for it. The risk that unpaid balance bills will not be recuperated is sitting on the balance sheets of physicians and hospitals around the country. They don’t want to send patients to collections, but if they want to keep treating other patients, they have to get paid somehow.

Still, shifting the risk of unpaid accounts receivable to a receivables management firm is difficult for healthcare providers because the clinical relationship is a personal one. The brand has a face and a name behind it.  Many healthcare providers want to protect their patients and carry the clinical experience into the financial realm. To do that, what they need are downstream revenue cycle professionals who understand their unique Catch-22, and can help them recover payment without eroding their brand and souring the clinical relationship they’ve worked so hard to cultivate.

Creditors’ brand/mission must flavor the collections approach

In acquiring AR assets from a healthcare system, you’re buying the receivables—not a hard-earned brand. Often the whisper of brand promise and the original missive of the healthcare provider can be deafened in the financial transaction. Not every receivables management firm understands that medical collections has to be handled in direct and intentional alignment with the mission, values and brand promise of the original creditor. The brand of a healthcare provider was built with care, over time. Therefore, treating the original creditor’s brand as an asset all the way through the revenue cycle is an absolute must.

What should providers look for in when partnering with a receivables management firm?  Consider the patient experience: A sick man visits a healthcare facility, and is given a set of forms and possibly some financial counseling. He then sees the doctor, has some tests done and analyzed, and a few weeks later, gets multiple bills in the mail for one clinical experience. Maybe his was an ER visit, and he chose an in-network hospital, but wasn’t aware that a staffing agency would send him a flurry of bills for physicians not in-network.

Who explains this complicated situation to patients? If they’re lucky, their medical provider sells aging accounts receivable to a receivables management firm committed to protecting the hospital or physician practice brand promise. As part of that commitment, the receivables management firm and its trained and monitored agents will explain the complicated billing situation to customers, and work to resolve any disputes or misunderstandings. Happy patients pay their bills; confused patients dig their heels in and become paralyzed and uncommunicative.

A conscious, successful strategy will reflect the sensitive nature of medical collections by protecting the clinical relationship. A brand is an asset like any other, and especially for healthcare providers, it must be treated that way.

Lee Brockett
Managing Director, Cascade Capital