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Patient Out-of-Pocket Expenses Rise, Squeezing Physician Cash Flow


The Health Care Cost Institute reports patient out-of-pocket expenses will rise 4.8 percent to $3,072 for a privately insured family of four.

Maintaining cash flow is a growing challenge for physician practices now that their "bread and butter" privately insured patients are paying more and more of their healthcare expenses out of pocket, and it will get worse.

Out-of-pocket expenses not including premiums have increased to an average $768 for each privately insured consumer in 2012 according to the nonprofit, non-partisan Health Care Cost Institute, and are projected to skyrocket as much as 50 percent in 2015 under Obamacare’s numerous mandates.

Maintaining your practice’s cash flow requires much more than initiating more aggressive patient obligation collections policies. Payer contracting, practice marketing, and patient-service strategies must change to keep pace.

Payer Contracting

The market will soon be flooded with newly insured and reinsured through exchanges, mostly women because newly mandated coverage favors women and relies on men to share the cost. Employers will be re-evaluating policies and, if they keep insurance at all, will be gravitating to higher-deductible policies to keep pace with subsidized premiums.

Identifying major area employers with whom they insure, and whether or not they have high-deductible policies, is a new must. It isn’t just how much the insurer pays you anymore, it is how much the employee must pay you as well. Upscale employers typically have upscale insurance with higher reimbursements, lower co-pays and deductibles, and employees who can afford to pay them. As obvious as focusing on them as this may seem, going in-network with these payers and competing for their members has not dawned on most, if any, practices as a strategy.

Practice Marketing

Identifying and stratifying the best-insured employees and their families is a key competitive and marketing strategy. Getting those patients established with your practice is goal number one. Strategically, getting in network and understanding their needs is a must. Tactically, your marketing should be keyed to them. Your message should resonate with them. Your practice services should cater to their needs. And, you should be using experienced professionals for research, branding, messaging, and marketing.

Patient Services

Doing things right to gain a competitive advantage requires an investment in time and money. Keeping patients does not. It requires something else except in rare cases: a change in practice culture.

With all of the focus on patient-centered care, there is almost none on patient-centered services despite reams of literature showing that satisfied patients feel better, do better, and bring their friends and family along with them.

Change begins at the front desk with two very simple things: welcoming people and having an experienced staffer answer phones. How patients are treated sets the tone for the rest of the visit and determines the “patient experience,” and it all rests on office culture: Does your practice accept patients, or welcome them?

It all circles back to the beginning with two straightforward quirks of human nature: Happy patients are most likely to pay their bills while unhappy patients are most likely to sue.

For good advice on how to provide excellent customer service, click here.

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