How to measure the healthcare billing experience

Healthcare providers are collecting more from patients than ever before, yet the healthcare billing experience remains confusing, complicated and downright unpleasant for most patients.

A recent survey of over 1,000 US consumers found that nearly four in ten consumers have switched providers because of a negative billing experience. About 41% of respondents also said they had left a negative review of a provider because of these experiences.

Lackluster billing experiences coupled with the growing cost of healthcare, especially for patients, are making it even more difficult for providers to collect revenue for services rendered. In fact, patient collection rates have declined after the COVID-19 pandemic, from about 55% in 2021 to almost 48% in 2022 and 2023. At that time, providers received barely a quarter of the total charges owed to them, writing more off as bad debt despite historically low uninsured rates.

Healthcare leaders understand that meeting patient expectations from a billing perspective is important. However, provider organizations continue to fall short of being “patient-friendly” when it comes to billing, payments and experience. The problem? Most providers don’t have the right performance metrics in place to measure their billing experience, says Ryan McPherson, vice president of commercial strategy at Cedar.

“The majority, if not all, reporting or benchmarks that are available in the industry are heavily indexed and weighted against the same revenue cycle metrics and KPIs that, frankly, have been in place since I started consulting in the early 2000s,” McPherson explains.

There is a good reason for that; providers still get the lion’s share of their revenue from insurance companies. So, providers haven’t necessarily had to dig deeper into the billing experience for patients since patient collections made up so little of their revenue. However, high-deductible health plans and patient financial responsibility have only continued to climb over the last decade while hospital margins have gotten slimmer.

“When even the best performing providers are operating on less than a 1% margin, getting every little bit you can is critical,” McPherson states. “The narrative of outsourcing self-pay or patient balance collections to set it and forget it is changing. Yet, we have not observed anybody responding with an ability to aggregate data objectively and provide market benchmarks for providers to see how they perform against a cohort of peers.”

Cedar is looking to fill that gap. The healthcare financial engagement company announced the PFX Benchmarks initiative at the 2024 Healthcare Financial Management Association (HFMA) Annual Conference. The initiative will identify and study benchmarks specific to the billing experience and provide individual provider analyses, using Cedar’s own data on over 900 million touchpoints across 30 million patients combined with data from the Healthcare Management Academy.

McPherson, who is also the executive sponsor of Cedar’s benchmarking initiative, aims to create a “North Star” for the billing experience. That means creating benchmarks and KPIs that align with a patient-friendly billing experience so providers can understand and measure themselves against an industry-accepted good experience.

Importantly, these measures will be independent of product utilization and without vendor bias, according to McPherson.

“A lot of the benchmarks that a provider's going to get are from their EHR, and those are primarily driven by feature usage or feature adoption, not necessarily by leading indicators or outcomes,” McPherson explains. “So, IT and revenue cycle operators will say things like, ‘We're in the top 10% of insert-the-EHR-name in terms of performance.’ But when you pick a little bit deeper at that, what they're really getting at is that their EHR provider has told them that they have more functions, more features, more workflows turned on compared to peer organizations.”

The measures, though easy to attain and track, don’t “speak to the effectiveness or the outcomes that providers are getting from” workflows, software features and other functionalities they have turned on as part of their technology suite, McPherson continues.

To understand actual performance from a provider’s technology usage and other billing practices, Cedar identified five initial benchmarks using data McPherson believes should be readily available to providers and separate from specific EHR usage.

The benchmarks include:

1. No-show rate
2. Patient balances to total active A/R
3. Patient liability resolution efficiency
4. Self-service and check-in efficiency
5. Patient-friendly collection rate

Some of the benchmarks are already accepted by the healthcare industry, like the no-show rate, and are likely something finance and revenue cycle leaders are already measuring. However, the other benchmarks are based on core revenue cycle metrics with a new angle, McPherson explains.

For example, providers should already be measuring their patient collection rate. But this new benchmark puts a new spin on that KPI by breaking down where those payments come from. So, the benchmark narrows the focus on how much was collected from bad debt or more aggressive collection strategies versus the first attempt at collection.

Similarly, the patient liability resolution efficiency benchmark may be new to providers, but it looks at how many calls or portal inquiries a provider gets compared to how many statements they send out.

These five benchmarks are just the beginning for Cedar. With some benchmarks in place, the company hopes healthcare leaders move past the mentality that the billing experience is just unpleasant to being something they can measure and improve. And as providers make this shift, Cedar intends to add to the benchmarking initiative and give providers more industry standards for payment plan collections, digital engagement, recovery rates and more.

“You've got to start somewhere, and if you don't measure it, you're not going to be doing much in terms of pushing or challenging yourself to think differently against the status quo,” McPherson says. “And it's when you find yourself [as a provider] most prone to leakage and patients switching to another provider.”