Maintaining Collections During a Pandemic – Part 2

As hospitals across the country continue to battle COVID-19, the financial crunch is hitting as hard as the virus. In fact, an American Hospital Association report estimates that over the four-month period from March 1, 2020 to June 30, 2020, American hospitals and health systems will experience $202.6 billion in losses, or an average of $50.7 billion per month, due to the Coronavirus.

In the first article, we talked about some of the causes for the painful revenue losses hospitals and health systems are experiencing. From the cost of treating COVID-19 patients and increases in PPE prices to the downturn in elective surgeries and additional support some are providing their workers, it feels like hospitals and healthcare systems are being hit from all sides.

While the outlook may seem quite bleak, there are some factors that are working in favor of hospitals and health systems during the Coronavirus pandemic. Because many states have established stay at home orders or at least suggested them, people are not shopping like in the past. In fact, a report by the Visual Capitalist shows that between late February and mid-May, consumer spending was down nearly 30-percent year over year. With non-essential shopping closed, restaurants relying on takeout and delivery, and travel nearly nonexistent, people are not spending money at the same clip as they have before. While online shopping has increased, it hasn’t fully replaced going to the mall or their favorite store. This means in general, people have more of their income available for other expenses, such as past due medical bills.

Another positive factor is the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Hospitals and healthcare systems did receive $100 billion in funding, but workers who were forced on to unemployment are also receiving an additional $600 a week, which in many cases actually increased their take home pay.

A recent study by the Becker Friedman Institute for Economics at the University of Chicago found that the additional $600 a week received on top of regular unemployment insurance, known as Federal Pandemic Unemployment Compensation, has actually more than replaced lost wages for the majority of people currently unemployed. The study showed that 68-percent of unemployed people exceeded lost revenue and the median replacement rate across the nation was 134-percent. The additional unemployment compensation is currently scheduled to last through July 31, 2020.

What does this mean for hospitals and healthcare systems? It means that even though we are seeing record unemployment numbers, consumers are not necessarily feeling the negative impact that was expected to hit. Increased unemployment benefits and lower consumer spending means there is a unique opportunity to speak to patients about paying their past due medical bills.

That said, this does not mean we recommend having your collections partners double down on more aggressive collection efforts. The COVID-19 pandemic has affected everyone differently and there are patients who are unable to pay their bills, but with the majority of the workforce still on the job and a good number of the unemployed receiving benefits greater than their normal pay, it’s important to continue contacting your patients. Additionally, it is important to keep your inbound communication options strong, making it easier for patients to reach out to you with any questions or payments.

Additionally, there are steps we recommend your collections partners take to help minimize the impact health issues will have on your patients during the Coronavirus pandemic:

  • Flag Accounts – Add a notation to accounts that are suffering financially due to the Coronavirus in both your system and your collections partner(s) system. An example of this is Epic users adding a Billing Indicator to track the accounts and ensure that collection activities cease until the pandemic has subsided.
  • Credit Reporting – Have your collections partner(s) temporarily stop reporting to the credit bureaus. With so many other issues occurring surrounding this pandemic, it is not the right time to affect an individual’s credit. This will also ensure that Coronavirus-related charges do not accidentally get reported. We do not know what will happen with these charges in the future.
  • Legal Action/Garnishments – Have your collections partner(s) pause all new legal action and new wage garnishment efforts. As with credit reporting, this is simply not the right time to pursue these types of actions.
  • Insurance Check – Reviewing, identifying, and verifying that insurance was correctly applied to your patient’s accounts is another step you and your collections partners can take to help maximize your revenue. Some accounts may be payable but were not correctly covered by the insurance company. Having your collections partners help identify missing insurance and follow up on these accounts could lead to the insurance company paying, which is a major patient satisfier.
  • Explore All Avenues of Additional Reimbursement – Look for opportunities to apply for COBRA with patients who may have recently lost employment. Additionally, backdated Medicaid or disability will become a greater revenue source for hospitals.
  • Financial Assistance – More patients will qualify for financial assistance, so working to qualify these patients as efficiently as possible will be extremely beneficial. This includes Medicare patients who will also qualify for Medicare Bad Debt. 

COVID-19 has changed the way we look at our world. It is important to stay on top of local and state regulations to ensure you are staying on the right side of any new rules and laws that are put in effect. And talk to your collections partner. They should have the knowledge and expertise needed to help guide you through these ever-changing times.


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