There are lots of surveys that have established that there is a clear and distinct link with money lending and health. These surveys have also raised a couple of issues that are predominantly important for any health care asset-based lender to understand.
These surveys typically focus on the link between the pressures to the chief collateral receivables that are held by the asset-based lender and the pressure to the financial performance.
Some of these key issues that most of the health care asset based money lenders and the health care organizations usually find themselves entangled with and need to consider include a number of drivers of distress.
All these are well-documented drivers and are known to have a tangible impact on the value of the collateral held by the lenders.
The survey results
According to a specific survey conducted by the Revenue Cycle it is found that:
- The process is the biggest challenge that needs to be identified
- There are more than 72% of respondents who have cited payments and reimbursements as the most important challenge.
Moreover, the survey conducted especially on the middle market healthcare companies has the issues segmented into two specific areas namely:
- The downward pressure on pricing that challenges the profitability levels and
- The challenges regarding the payment received for the services provided.
This has led to another significant challenge which is: making health care lending faster, cheaper and better.
Cost of lending and borrowing
The industry experts say that there are ideally three major and different ways in which the cost of lending and borrowing can be rationalized by the traditional banks and financial institutions as well as alternative sources such as https://www.libertylending.com/. These are:
- By increasing the rate of denials
- By reducing the rate of reimbursements and
- By selecting alternative payment models such as Fee for Value instead of Fee for Service.
All these will affect the revenue cycle process of the company. This cycle consists of different aspects such as:
- Coding
- Billing as well as
- Proper patient care decisions.
While considering these three important areas it is required to breakdown all these so that you can know and deal with the negative impacts that are inherent and significant. It depends on the quality of the collateral held by the lender.
Reasons for denials
When it comes to denials, you must know that there are several causes for it. These causes can be varied but in most of the cases, it is seen that these denials are the result of issues that come with the front end processes such as the process for verifying the eligibility of a borrower.
However, all these issues can be extended all throughout the process. The results of these issues and denials can also be due to several other factors such as:
- Incorrect and missing claims data
- Missing documentation and even
- Missing or inadequate authorizations.
The processes become more burdensome when it is blended with the complexity of billing and coding created by the insurance companies. This also increases the risk profile when it comes to collecting the accounts receivable that constantly continues to upsurge.
However, it all depends on the extent of the lender lending money against the outstanding accounts receivable. Therefore, monitoring the denial rates is very important for a borrower because this is the primary financial metric.
Composition of healthcare receivables
In addition to the above, there is another important metric to be considered by the asset-based money lenders. This is the track record and the data analysis by monitoring the varying composition of healthcare receivables. This will help the money lenders in different ways.
- Apart from the industry-wide focus on the cost of health care and its reduction, it will help them to focus on the other major concern for the lenders is to combine those who pay for health care with those who receive such care.
- As a result, it will also help in ascertaining the payer mix which is traditionally concentrated to the large commercial payers or government payers. This is a field that is ever changing over time. This is due to the increased exposure to private payers.
- In addition to that, the higher deductibles as well as the escalation in patient responsibility are also causing a reduction in payments to health care providers especially for the patient care services offered by the traditional payers.
All these imply that that the private pay receivable account has significantly low quality as compared to any commercial or a government payer. This is even after considering the risks of denials.
The study reports
As far as the collection rate on the private pay bills are concerned several study reports show that it is extremely low. In addition to that the industry studies also estimate that:
- The percentage of patients not paying their health care bills in full will rise up to 95% by the end of 2020.
- It is also found meanwhile that the percentage of patients that will have made partial payments toward their health care bills will go down significantly from almost 90% to almost 77%.
In addition to that when it comes to the pressure on receivables, it is found that the real estate is not devoid of a few unfavorable pressures and trends. When it comes to traditional healthcare services and its providers, it is found that there is a larger need for a brick and mortar point to provide such care. It is also required to design products and services that will suffice and fulfill the needs of the individuals.
Moreover, there is an ever-increasing need for a physical location that will favor a model which will look after the efficiency factor with improved quality of service. This will help the health care providers to decrease the borrowing costs and at the same time improve the convenience factor of the patients.
Lastly, with improved technologies such as mobile resources and telephone-health service, outpatient treatments can now be provided to the patients at a cheaper cost and with higher convenience levels.
