After bills are paid, firms help providers direct payments to the right place

Much attention is paid to how health systems collect bills on the front end, but the back end is where more of the money comes.

And “it's an extremely challenging accounting process for hospitals,” said Jonathan Wiik, principal of healthcare strategy with TransUnion Healthcare and a former hospital finance administrator.

Back when most patients paid with cash or checks, most health systems relied solely on banks to handle their payment processing.

But as the industry has grown more complex, online and point-of-sale payments became necessary, according to some surveys. Those payments grew from 2% of transactions to 11% from 2011 to 2014. So some systems have turned to merchant services providers.

Things get especially tricky when health systems acquire hospitals, physician practices or other businesses. Suddenly, making sure payments are applied against the right bills becomes a challenge. The same happens during the installation of a new electronic health record system.

Providers also run into problems when they try to consolidate patient billing across their hospitals, physician groups and other practice areas. If they lack a consistent way of applying payments, it can result in credit issues for patients, said Doug Story, director of revenue management consulting for consulting firm Navigant.

“That's where you run into this situation where the patient paid, but then they receive a statement and the payment hasn't been applied appropriately,” he said.

Administrators with Bellin Health, a small Green Bay, Wis.-based health system with an acute-care hospital, ambulatory surgery center, cancer center, primary-care clinics and outpatient imaging, realized about three years ago that the system needed to consolidate reporting across its multiple billing areas. Bellin also needed to accept online payments through its web portals. Leaders chose Madison, Wis.-based merchant services firm Wind River Financial for the job.

Wind River has about 500 healthcare clients, mostly in the Midwest, ranging from very small clinics with one or two physicians to large health systems, according to CEO Mike Carow.

After Wind River implemented a single payment platform across Beloit (Wis.) Health System's more than 10 hospitals, clinics and hospice locations in the state, the system reduced its annual credit-card processing costs by more than $40,000. The system's staff also spent less time on security compliance.

At Madison-based Dean Medical Group—Wind River's largest client—the firm implemented its payment-processing software across all of the system's 400 pay stations in about four months. Dean, which joined SSM Health in 2013, operates 60 clinics, has about 500 physicians and serves more than 400,000 health plan members.

Banks and merchant services firms like Wind River compete in the payment-processing market, said Chuck Alsdurf, director of healthcare finance policy and operational initiatives for the Healthcare Financial Management Association. The best vendor will depend largely on the system's size and how many billing systems it has. Although he doesn't have hard data to prove it, Alsdurf said he thinks banks probably still handle most tranactions in the market.

But really any bank or merchant services provider can help with the patient experience since they have more knowledge on when and how to ask for payment.

Carow said he understands that what healthcare providers really want to do is care for patients. Focusing on processing payments just gets in the way, he said.

“We as healthcare providers, we have enough complexities in our lives dealing with our day-to-day jobs and caring for the patients in our communities,” said Kevin McGurk, Bellin's senior reimbursement coordinator. “We don't want to spend a lot of time on things like revenue cycle and getting payment from the customer.”