HFMA warns affordability crisis is driving up provider bad debt

Editor's Note

According to a Healthcare Financial Management Association (HFMA) analysis, the US healthcare system is in “serious condition,” with affordability collapsing and provider financial risk escalating, HealthLeaders September 19 reports. The group’s new Healthcare Vitals Tracker scored the industry just 35.9 out of 100, compared to a peak of 90.8 in 1997, citing affordability as the primary driver of the decline.

For revenue cycle leaders, the report links affordability challenges directly to higher patient bad debt, increased collection costs, and mounting provider risk. The article explains that as costs rise, more of the burden has shifted to patients, who are both difficult and expensive to collect from.

Three trends are fueling the problem. High-deductible health plans have expanded patient financial responsibility, raising the likelihood of bills going to collections. Administrative waste in billing and insurance processes inflates costs and premiums, leaving patients with larger out-of-pocket expenses. And patient dissatisfaction, now at its lowest level since 1997, makes collections even harder, as confused or frustrated patients delay payments or dispute bills.

The article notes that while revenue cycle teams cannot reverse systemic affordability issues, they can adapt strategies to mitigate risk. Suggested actions include providing transparent cost estimates before services to set expectations, making financial assistance programs more accessible to underinsured patients, and leveraging personalized communication tools to lower collection costs.

HFMA says moving financial conversations upstream is critical. By engaging patients earlier with clear, empathetic communication and supportive payment pathways, providers can both improve patient experience and reduce the likelihood of bad debt.