Explore 4 strategies to fight inflation while providing solutions for patients
According to the Consumer Price Index, as of October 2022 inflation has risen to 7.7%. However, certain items such as food (10.9%) and energy (17.6%) have risen significantly and are chipping away at incomes because wage increases haven’t surpassed 4%. As a result, patients will have less money to cover medical costs.
Inflation is even affecting the “recession proof” healthcare industry. Next year could be the toughest year providers have faced given the rising supply chain costs and expensive contract labor. Additionally, denials have risen to 11% this year with prior authorization denials increasing 67% from last year. When you add in a 5% increase for aged accounts receivable (AR) from the beginning of the year, these challenges further increase the cost of care for providers. Given the current economic climate, below are ways we believe providers can combat inflation and provide solutions for patients, so they have the financial means to prioritize healthcare expenditures.
1. Find new, untapped revenue sources such as philanthropic aid
The growth of high deductible health plans, HSAs, rising deductibles and expanded max out of pocket thresholds have created more financial patient responsibility. In addition to rising commercial insurance costs, Medicare part B monthly premiums increased by $21.60, the largest dollar increase in the program’s history.
This period of high inflation has been challenging for patients but also for providers whose revenue is dependent upon patient payments. One untapped revenue strategy available to any provider is leveraging philanthropic aid programs to cover patient expenses. There are $30 billion available annually across thousands of programs for this exact purpose. However, the ability to tap into these philanthropic aid programs to cover patient expenses is often underutilized and even unknown to some providers. Connecting patients with these programs creates wins on all sides. Patients aren’t forced to choose between putting food on the table and receiving medical care, resulting in better overall health. By covering these financial costs, patients will also have more income that can be spent on other items such as better food and other healthcare needs. Additionally, providers can uncover revenue most didn’t know existed, reducing bad debt and write-offs.
2. Invest in innovation and automation
Technology is here to stay, and we all have embraced it in just about every aspect of life. Innovating how health systems operate and deliver care is always going to be important given the current climate. Nearly 1 in 5 healthcare workers have quit their jobs during the pandemic. Given the pipeline of healthcare training programs, providers are challenged to do more with fewer human resources. Innovative automation is a strategy providers need to lean into.
Automating administrative tasks is a strategy which maximizes doctors’ and clinicians’ time with patients. Most processes managed by paper and spreadsheets can be automated with technology. One example is with patient assistance to tap into philanthropic aid. Without technology, this is a manual process managed across spreadsheets and post-it notes by providers, clinicians and/or social workers. It’s time-consuming and only a small fraction of the patient population can be helped due to the limited resources that can be spent on this manual process. With technology, patients can be automatically matched to philanthropic aid programs and quickly enrolled digitally.
Additionally, automation can improve retention by allowing providers to work at the top of their license versus getting buried in manual, administrative work. Since late 2021, healthcare has struggled to retain their workforce due to pay, work flexibly, and burnout – lack of technology was a big part of that.
3. Consolidate vendors for cost benefits and economies of scale
By consolidating vendors, providers can create meaningful and deep strategic partnerships across select vendors rather than basic relationships across many which provides an opportunity to grow and create value together. Another opportunity besides easier vendor maintenance is the ability to co-innovate with vendors in areas such as feature and roadmap development.
4. Be strategic with outsourcing
Historically, health systems have preferred to insource services both clinical and administrative. Given the technology and economies of scale from some vendors, it may make sense to partner on business-centric functions.
Outsourcing versus insourcing isn’t always an easy decision to make because there’s always a balance between making economic sense and the effect on patient experience. Are there services you could outsource for economic value while generating a positive patient experience? Outsourcing aspects of the revenue cycle have proven beneficial. Another example is outsourcing patient assistance to patient advocate experts that are amplified by technology.
In conclusion, inflation is here to stay for the foreseeable future. It’s going to force patients to make difficult decisions about their medical care. Health systems are going to face yet another difficult couple of years. However, there are cost-effective ways that both can survive the rising costs of inflation.