Survey on Healthcare Providers’ Struggles over Growing Accounts Receivable and Bankruptcies

The healthcare industry is facing a financial crisis, as providers struggle to collect payments from patients and insurers, while facing rising costs and declining revenues. According to a recent report by the American Hospital Association (AHA), hospitals and health systems lost an estimated $323.1 billion in 2020 due to the COVID-19 pandemic, and are projected to lose another $53.6 billion in 2021. The report also stated that 39% of hospitals had negative operating margins in 2020, and that 30% of hospitals are at risk of closure.

One of the main challenges that providers face is the growing amount of unpaid medical bills, or accounts receivable (AR), which are the payments that providers are owed by patients or insurers for the services they have rendered. AR can affect the cash flow and liquidity of providers, and can lead to bad debt, write-offs, and bankruptcies. It can also increase the administrative burden and cost for providers, who have to spend time and resources to pursue and collect payments.

Several survey reports have examined the factors that contribute to the increase in accounts receivable, and the impact that it has on providers and patients.

Here are some of the survey reports and their key findings:

• A survey by the Medical Group Management Association (MGMA) found that 47% of medical groups reported an increase in self-pay or uninsured patients in their payer mix in the previous year. The survey also found that 32% of medical groups reported an increase in patient deductibles and copayments, and that 28% of medical groups reported an increase in patient bad debt. The survey suggested that the COVID-19 pandemic and the economic downturn have resulted in more patients losing their health insurance or opting for high-deductible plans, which can make it harder for them to pay their medical bills.
• A survey by the American Medical Association (AMA) found that 83% of physicians reported that prior authorization burdens have increased over the past five years, and that 30% of physicians said that it has led to a serious adverse event for a patient in their care. The survey also found that physicians and their staff spend an average of 16 hours per week on PA activities, which costs an estimated $43 billion per year. The survey indicated that PA is a process that requires the provider to obtain approval from the insurer before prescribing or delivering certain treatments or services to the patient, and that it can cause delays, denials, and disruptions in care, as well as increase the accounts receivable for providers.
• A survey by the Commonwealth Fund found that 28% of U.S. adults ages 19 to 64 reported having medical debt or problems paying medical bills in 2020, and that 13% of U.S. adults reported being contacted by a collection agency for unpaid medical bills in the past year. The survey also found that 23% of U.S. adults reported not getting needed care because of cost in the past year, and that 18% of U.S. adults reported having difficulty affording their health insurance premiums, deductibles, or copayments. The survey showed that medical debt and affordability issues are more prevalent among low-income, uninsured, and underinsured populations, and that they can affect the access, quality, and outcomes of care, as well as the financial security and well-being of patients.

These survey reports highlight the challenges and consequences of the growing accounts receivable and provider bankruptcies in the healthcare industry, and the need for solutions and reforms to address them. 

Some of the possible solutions and reforms that have been proposed or implemented by various stakeholders include:

• Implementing patient financing programs, which are programs that offer patients flexible and affordable payment options for their medical bills, such as interest-free or low-interest loans, installment plans, or discounts. Patient financing programs can help providers increase their cash flow and reduce their accounts receivable, while also improving patient satisfaction and loyalty. Patient financing programs can also help patients avoid medical debt, collection agencies, and credit score damage, and enable them to access the care they need without financial stress.
• Adopting electronic prior authorization standards and processes, which are standards and processes that enable providers to submit and receive prior authorization requests and responses electronically, and access information about the insurer’s prior authorization requirements, criteria, and decisions. Electronic prior authorization standards and processes can help providers reduce the time and hassle of prior authorization, and improve the efficiency and transparency of the prior authorization process. Electronic prior authorization (ePA) standards and processes can also help insurers reduce the administrative and operational costs of PA, and ensure that the decisions are based on evidence and best practices.
• Expanding health insurance coverage and affordability, which are policies and programs that aim to increase the number of people who have health insurance, and to reduce the cost of health insurance for individuals and employers. Expanding health insurance coverage and affordability can help providers reduce their uncompensated care and bad debt, and increase their revenues and margins. Expanding health insurance coverage and affordability can also help patients avoid being uninsured or underinsured, and reduce their out-of-pocket expenses and medical debt.

These solutions and reforms can help providers and patients cope with the financial challenges and pressures that they face in the healthcare industry, and improve the access, quality, and outcomes of care. However, these solutions and reforms also require collaboration and coordination among various stakeholders, such as providers, insurers, employers, policymakers, and regulators, as well as innovation and adaptation to the changing needs and expectations of the healthcare market.