3 Reasons Many Hospitals Aren’t Getting Paid

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More than half of hospital bills never get paid. There are a variety of reasons this trend has been growing over the past several years.

claims recovery process

1. Insurance Companies Are Paying a Smaller Share

Historically, hospitals and other medical providers received 90% of the payments for their services from insurance companies. However, with more patients on high-deductible medical plans, the portion of medical bills being paid by insurance has dropped to about 70%. When insurance companies don’t pay their share, medical providers can work with firms that specialize in the claims recovery process to obtain payment. However, when individuals are expected to pay, hospitals have only been successful in collecting about 35% of the total amount owed. 

2. Doubtful Accounts Have Been Increasing

Doubtful accounts are accounts that hospital billing departments have determined are unlikely to be paid. Hospitals across the country have seen a rise in this type of account due to an increase in patient deductibles and co-pays and in personal bankruptcies. The failure of some states to expand the Medicaid program has also contributed to more patients being unable to pay their medical bills. 

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3. Billing Processes Not Designed for Patient Payments

Because hospitals used to get such a small portion of their total revenue directly from patients, most billing systems were designed to accommodate payments from insurance companies. These systems do not work well for collecting small, incremental payments from individual patients. Additionally, because patients were rarely expected to pay a large portion of their medical bills in the past, medical providers have not been transparent about the potential costs of treatment, leaving patients unprepared for the bills. 

As the payment model for patients and medical providers continues to evolve, new billing systems and payment options will need to be implemented to reduce the number of medical bills that go unpaid. These changes should benefit both medical providers and patients.

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