©2007 npas1 segmenting hospital accounts to maximize cash march 22, 2011 garett jackson, cfo hca...

©2007 NPAS 1

Segmenting Hospital Accounts to Maximize Cash

March 22, 2011

Garett Jackson, CFO

HCA National Patient Account Services

©2007 NPAS 2

Learning Objectives

• Understanding the Self Pay Portfolio

• How predictive models were incorporated into the process

• What variables are within the data already obtained from the patient?

• Future state of modeling and segmentation

• Translating data into results

©2007 NPAS 3

Understanding the Self Pay Portfolio

Benchmark – Evaluate – Segment - Measure

©2007 NPAS 4

Front-End: Copay Responsibility Shift

Insurance plans are paying less of the overall bill. Hospitals are left to get the remaining portion from the patient.

Gains upfront are not offsetting the increase in responsibility

©2007 NPAS 5

Front-End Efforts – Self Pay

More of the original balance was discounted. Front-end collections from the patient are decreasing at the same time.

©2007 NPAS 6

200

300

400

500

600

700

200801 200802 200803 200804 200805 200806 200807 200808 200809 200810 200811 200812 200901 200902 200903 200904 200905

Average Credit Score by Placement Month

Private Pay - CoPay and Deductible Private Pay - Pure Self Pay

Economic Conditions Have Changed

©2007 NPAS 7

Last Fifteen Months

300

350

400

450

500

550

600

650

700

2009

09

2009

10

2009

11

2009

12

2010

01

2010

02

2010

03

2010

04

2010

05

2010

06

2010

07

2010

08

2010

09

2010

10

2010

11

2010

12

Monthly Average Credit Scores

Copay Avg Score Self Pay Avg Score

©2007 NPAS 8

Negotiation: What to Expect

82% of SP calls don’t commit to pay

©2007 NPAS 9

Collections Life Cycle

Front End Collections

Pre-admit payments

Payment at registration

Payment at discharge

Payment from billing

Back Office (Early Out)

Payment from letters

Payment from contacts

Payment from re-billing

Customer Service Focus

Identified as Facility

Collection Agency

Payment from credit reporting

Payment from legal actions

Payment from aggressive collection activity

Identified as collection agency

Bad Debt

NPAS Statistics

Mission Based Collection Practices

©2007 NPAS 10

HCA’s Bad Debt Action Plan

• HCA started implementing its Bad Debt Action Plan in an effort to understand and attack the issue quickly. Early out was a key focus of the plan:– What does the healthcare portfolio look like compared to

other industries?– Is it possible to change the early-out collection strategy to

address the portfolio?– Which resources (up-front, early-out, primary) are best

equipped to handle the inventory?– Which key indicators have the largest impact on

collections?

©2007 NPAS 11

Credit Scoring Notes

• Used the Equifax ERS 3.0 scoring method, which ranges from 1 to 1000

• Grouped number of accounts in scored index ranges of 100

• Scores of 0 mean that no data was available

• Scoring vendor provided six industry comparisons done by Equifax

• Compared results against All Industries, Auto Finance, and Bankcard Industries

• Work Effort is defined as Attempts, Contacts and Letters

• Self Pay was analyzed for comparative purposes. However, the study compares Copay and Deductible in general.

• Scoring vendor provided scores for approximately 241k accounts with a 96% score rate

• Used a random sample of closed accounts

• Statistical accuracy of sample is 95% +/- 4% as a valid representation of our inventory

©2007 NPAS 12

Early Out Inventory

77.31%

44.09%

27.93%

17.65%12.67%

11.02%

7.69% 6.44% 5.07%6.92%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts

Credit Scoring Index Ranges by Industry Compared to Recovery Rate at NPAS

NPAS (Hospital) Industry Average of All Industries Average of Auto Finance Bankcard Industry NPAS Recovery Rate

©2007 NPAS 13

Upfront Collection Efforts

HCA Upfront Collections by Scoring Range

5.0%

3.0%

1.8% 2.0%

1.0%0.7% 0.6% 0.6% 0.5% 0.6% 0.7%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Perc

en

t R

eco

vere

d U

pfr

on

t

Pct Recovered Upfront

©2007 NPAS 14

Copay/Deduct – Group MixComparison of Net Placements and Recovery

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

000-100 101-200 201-300 301-400 401-500 501-600 601-700 701-800 801-900 901-High

Rec

over

y R

ate

Per

cent

of A

ccou

nts

in S

core

Ran

ge

Credit Scoring Index Ranges by Region Compared to Recovery Rate at NPAS

REGION 01 - Percent of Net Placements REGION 05 - Percent of Net Placements REGION 07 - Percent of Net Placements

REGION 01 - Sum of Recovery Rate REGION 05 - Sum of Recovery Rate REGION 07 - Sum of Recovery Rate

REGION 01 REGION 05 REGION 07

IndexRangePercent of Net Placements

Recovery Rate %

Percent of Net Placements

Recovery Rate %

Percent of Net Placements

Recovery Rate %

000-100 17.5% 29% 24.7% 22% 19.2% 19%101-200 4.3% 22% 6.2% 9% 8.2% 5%201-300 5.9% 21% 7.1% 12% 9.0% 15%301-400 4.8% 17% 7.4% 12% 6.2% 21%401-500 6.5% 38% 6.0% 12% 6.6% 24%501-600 3.9% 38% 5.7% 26% 5.6% 22%601-700 3.0% 45% 6.0% 26% 7.1% 51%701-800 5.0% 63% 5.1% 31% 5.2% 42%801-900 6.8% 63% 7.8% 40% 7.8% 59%901-High 42.3% 82% 24.2% 69% 25.1% 89%Grand Total 100.0% 55% 100.0% 33% 100.0% 42%

©2007 NPAS 15

48.58%

21.80%

12.22%

6.56% 4.48%4.04%

2.15% 2.24% 2.03%3.07%

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



Self Pay

©2007 NPAS 16

Self Pay - Emergency Room

52.76%

31.79%

14.41%

8.74% 6.27%

4.44%2.78% 2.79%

2.79% 3.24%

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



©2007 NPAS 17

36.39%

11.63%

8.95%

3.28% 2.08% 2.76%

0.45%1.09% 0.74%

2.10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



Self Pay - Inpatient

©2007 NPAS 18

Self Pay – Outpatient

68.54%

29.17%

21.12%

18.94%

7.42% 9.19%6.95%

4.16% 3.22%

5.88%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



©2007 NPAS 19

Self Pay - Surgery

52.85%

26.24%

21.83%

14.31% 12.76%

2.70%3.87%

5.46%3.42%

8.86%

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



©2007 NPAS 20

Incorporating Predictive Results

©2007 NPAS 21

Self Pay – Work Effort

5.6

6.1

5.75.6

5.35.1 5.0 5.0 5.0

4.748.6

%

21.8

%

12.2

%

6.6%

4.5%

4.0%

2.1%

2.2%

2.0% 3.

1%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Average Work Effort Versus Recovery Rate by Index Ranges

Avg Workeffort Recovery Rate %

©2007 NPAS 22

Credit Scoring Flow (Self Pay)

Score account

Day 2, receivecredit score

Category =Low ?

Letter 1 Hold 20 days Final Notice Letter Wait 30 days

No

Yes

FC 99Day 1

Current Flow

To Agency

Note:No match, match no score and typos will follow current flowPhase II - No match may go into low

©2007 NPAS 23

Copay and Deductible

83.72%

58.98%

47.25%

36.58%

27.61%25.15%

21.57%

17.88%

13.22%

22.32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0%

10%

20%

30%

40%

50%

60%

70%

901-High 801-900 701-800 601-700 501-600 401-500 301-400 201-300 101-200 000-100

Rec

ove

ry P

erce

nt

Per

cen

t of T

ota

l Acc

oun

ts



©2007 NPAS 24

Credit Scoring Flow (Copay and Deductible)

SP Letter

Wait 30 daysCategory =

Low ?

Final Notice Letter

Wait 30 days

No

Yes

Non FC99Day 1

Current Flow

To AgencyNotes: No match, match no score and typos will follow current flow Phase II - No match may go into low

Score Accounts Day 31Contact with

Patient or paymentreceived?

Current Flow

Yes

No

©2007 NPAS 25

Results: The Reason for Scoring

4.9 5.1

6.3

7.4

5.4

4.5 4.5 4.4

62.7%

50.9%

27.2%

11.8%

3.3% 1.5% 1.0% 1.5%

.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

901-999 801-900 701-800 601-700 501-600 401-500 301-400 201-300

2010 Recovery vs Work Effort

Avg Work Effort Recovery Rate

©2007 NPAS 26

Results: Credit Scoring Segmentation

Copay and Deductible-Low Score <$1,000

% Change

Net back % +0.47%

Average Attempts -91.64%

Average Contacts -65.96%

Average Letters -30.52%

Age at NPAS -34.38%

Self Pay-Low Score <$1,000

% Change

Net back % 1150.0%

Average Attempts -88.66%

Average Contacts -65.96%

Average Letters -4.02%

Age at NPAS -17.10%

©2007 NPAS 27

Keys to Implementation of Scoring

• Tools: Do you have the right tools to manage workflow with a score?

• Workflow: Determine what will be done with the score ahead of time

• Segmentation: What accounts will be scored? Cost can be an issue.

• ROI: What will happen to FTEs that might be working these accounts?

• Risk Tolerance: There will be accounts that are not correctly predicted

• Board Acceptance: Charity and Bad Debt processes require approval

©2007 NPAS 28

Key Performance Indicators

Evaluate – Adjust – Confirm - Predict

©2007 NPAS 29

Key Performance Indicators

©2007 NPAS 30

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

200 300 400 500 600 700 800 900 1000

Self Pay Trends

2009 Self Pay 2010 Self Pay 2009 Avg 2010 Avg Poly. (2009 Self Pay) Poly. (2010 Self Pay)

Credit Scores vs Recovery

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

200 300 400 500 600 700 800 900 1000

Copay and Deductible - Trend Performance

2009 Copay and Deduct 2010 Copay and Deduct 2009 Avg

2010 Avg Poly. (2009 Copay and Deduct) Poly. (2010 Copay and Deduct)

©2007 NPAS 31

0

10

20

30

40

50

60

70

Balance Size

Re

co

ve

ry P

erc

en

tag

e

Relationship of Balance Size and Recovery Rate

For Private Pay - Co-pay and Deductibles

Balance Size vs Recovery Rate

©2007 NPAS 32

Key Indicators Cont’d

R² = 0.970

0%

10%

20%

30%

40%

50%

60%

0 to 30 Days

31 to 60 Days

61 to 90 Days

91 to 120 Days

121 to 150 Days

151 to more Days

Age Placed Related to Recovery Rate

R² = 1

0%5%

10%15%20%25%30%35%40%45%50%

No Yes

Bad Address Related to Recovery Rate

R² = 1

0%

10%

20%

30%

40%

50%

60%

No Yes

Bad Phones Related to Recovery Rate

R² = 0.924

0%

10%

20%

30%

40%

50%

60%

70%

80%

High Probability Medium Probability Low Probability

Low Scoring AccountsRelated to Recovery Rate

©2007 NPAS 33

Key Indicators Cont’d

R² = 0.075

0%10%20%30%40%50%60%70%80%90%

Letters Sent Related to Recovery RateR² = 0.890

0%10%20%30%40%50%60%70%80%90%

Phone Contacts Related to Recovery Rate

R² = 0.998

0%10%20%30%40%50%60%70%80%90%

Insurance Private Pay -CoPay and Deductible

Private Pay - Pure Self Pay

Financial Class Related to Recovery Rate

R² = 0.933

0%

10%

20%

30%

40%

50%

60%

70%

Emergency Room Inpatient Surgery Outpatient

Patient Type Related to Recovery Rate

©2007 NPAS 34

Goals of Predictive Modeling

• Utilize the right resources for working accounts• Minimize the need for external information to

determine the best segmentation philosophy • Business Analytics – will a predictive model

support a conclusion driven by something other than data?

©2007 NPAS 38

HCA’s Results - Measuring Success

Secondary Champion-Challenger with BPO partner. Used same technology and same processes, but BPO allowed to hire, train and manage own staff.

Result:HCA processes performed 18% better than the BPO on an alpha-split champion challenge over a one year period.

Of the 40% Lift over external vendors, HCA can attribute 18% to people management, or roughly 45%.

©2007 NPAS 39

Questions?

• National Patient Account Services2700 Blankenbaker Pkwy Ste 100Louisville, KY 40299

• www.npasweb.com• 1-866-882-3582• Garett Jackson, CPA

– Chief Financial Officer– [email protected]

©2007 NPAS 41

Balanced Scorecard – Incentive Plan

Weighted Factors

Gold, Silver, and Bronze payouts on bonus points

Bonus Points – 70% measuring efficiency and effectiveness of CSP

30% - Other quality measures

Red figures are below team avg (coaching opp.)

RED LINE: Must be above to bonus

©2007 NPAS 42

Balanced Scorecard - Unit

Unit Performance Index

Accumulated unit averages from bonus plan monthly with same weightings

Ranked over prior year and previous months

Index above 1.000 means better than average performance of other months

Incentivize Managers to increase results

©2007 NPAS 43

CSPs must Overcome Objections

• Reasons Why People Object:

1.Avoidance 2. Confusion 3. WIIFM• Types of Objections

1. Feeling 2. Fact 3. Hidden• Remember the six steps to overcome

objections:1. Listen 2. Empathize

3. Explore and Probe 4. Agree

5. Playback 6. Solve

©2007 NPAS 44

Negotiating for Money

THE MOST MONEY AS QUICK AS POSSIBLE• Make sure you are not automatically setting due dates out 30 days

• Post Dated/Recurring Checks• Balance Resolutions

• Explore Non Linear Resolutions• Before issuing a final notice make sure you explore a non linear

arrangement. Ask probing questions! It’s possible that the customer’s current situation may only be temporary

• Negotiate!• Statistics show that 97% of the cash collected comes from accounts that pay in

full.• Settlement offers do not have to automatically be max %• Negotiate in increments

• Sixty months is not always the right amount of time• Make sure that 60 months is your last option!• Remember this option exists only as a LAST OPTION

©2007 NPAS 45

Other Payment Sources

• Selling A/R– Cash infusion for best credit accounts only– Ensure a low-cost effort is done prior– Lots of players entering market, some are losing money

• Longer Partial Payments– Time/value of money is irrelevant if you don’t receive payment– Collection agencies charge between 10% and 35%

• Partially Paid Settlement– Combination of partial payments and settlements– Traditional settlements require a large one-time payment that

does not usually help a cash-strapped GN– Negotiation of both what the amount needs to be, and how long

to pay it off are the two basic tenets of a financial transaction.

©2007 npas1 segmenting hospital accounts to maximize cash march 22, 2011 garett jackson, cfo hca...

Documents

inventory slide

responsibility slide

recovery slide

outpatient slide

segment measure slide

letters self pay

contacts payment

letters payment