Combating bad debt driven by high deductible plans

Bad debt from uninsured patients is nothing new for providers. However, the last five years have seen a rising shift in bad debt from insured patients. This huge shift is being driven by high-deductible health plans which have proliferated on the individual market, and now cover above 30% of even those with employer-based coverage.

This has taken the patient obligation from under 5% of hospital revenues to closer to 20% of hospital revenues. Increasingly, collecting the patient obligation from insured patients can make the difference between healthy profit margins versus losses.

Let’s take a look at what this could mean. For a health system with $1Bn in revenues, patient obligation will likely fall around $200M. Increasing the patient obligation collections by 20% can make a $40M impact on the bottom line.

In an increasingly difficult environment for providers, it is not easy to find other areas where such a clear impact can be made on profit margins. It is clear that investing in tools to support patient obligation collection can drive huge returns for providers.

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