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Boosting Medical Practice Revenue: The Critical Role of Patient Fee Estimates in Collection Success

Team Fuse
Team Fuse

Did you know that a vast majority of Americans value pricing transparency in healthcare? In a poll conducted for Patient Rights Advocate, 96 percent of voters across the political spectrum believe that healthcare consumers should have transparent patient fee estimates upfront. It's so important to patients that an estimated 40 percent are willing to cancel appointments or delay care if they don't receive healthcare payment estimates beforehand. Nearly half would switch providers for better upfront information about healthcare costs.

Upfront pricing estimates help to build trust with their providers. That transparency helps to alleviate the stress that patients feel about covering healthcare costs. Not only do estimates create a better patient experience, but they can also improve the likelihood that patients will make payments. 

One provider in New York implemented a transparent billing and estimate system, resulting in a 25 percent increase in collection rates within just six months. According to Experian, hospitals that utilize self-service portals for personalized patient fee estimates can increase payment collection rates by up to 133 percent

In this guide, we'll dive into the importance of transparent patient fee estimates and explore how they directly impact medical billing collection rates.

Why Accurate Payment Collection Rates Matter for Your Practice's Financial Health

Strong payment collection rates are vital to your practice's long-term financial health. The industry benchmark for patient responsibility collection rates is approximately 80 percent, but providers should aim for closer to 90 percent. However, new data shows that the average medical billing collection rate is far lower. In 2024, average rates dropped to just 34.4 percent for commercially insured patients. For hospitals and larger health systems, rates aren't much better, at below 48 percent.

Poor patient payment collection strategies and a lack of transparency cost your practice. Low collection rates contribute to higher administrative costs and an increase in bad debts. In 2023 alone, healthcare providers wrote off over $17 billion in bad debt. That significant hit in revenue affects practice operations. Administrators spend more time chasing payments. Meanwhile, squeezing margins limits the types of investments your practice can make in improving patient care and technology.

How Patient Fee Estimates Transform Your Medical Billing Collection Rate

Covering healthcare costs is a significant source of stress for patients. With per capita healthcare expenditures surpassing $16,000 in 2024, it's not difficult to see why. Upfront patient fee estimates make a difference. When patients fully understand their financial responsibilities, they're far more likely to pay on time and in full. That's because the transparency provided helps reassure patients that they won't receive any surprise bills that could suddenly impact their budgets and bottom lines.

Upfront estimates help reduce payment delays and improve your practice's cash flow. In a survey from Experian, 81 percent of respondents said that accurate estimates helped them better prepare to pay for healthcare costs. According to an MGMA financial report, practices that utilized price estimation tools experienced faster and more predictable cash flow due to improved collection rates. In a study by Health First, pricing transparency led to a 27 percent increase in upfront payments, which totaled over $2 million in annual revenue!

Proven Patient Payment Collection Strategies That Increase Revenue

Ready to improve your practice's patient responsibility collection rates? Here are a few strategies you should consider implementing.

Offer Pre-Service Estimates: Timing is everything. To help ease a patient's worries and give ample time to budget for payments, provide accurate healthcare payment estimates before rendering any service or treatment. Upfront transparency eliminates surprises and encourages timely payments.

Provide Upfront Payment Options: Payment flexibility matters. One health system experienced a 173 percent increase in patient responsibility payments after offering payment plans. When your practice offers payment options, patients are more likely to commit and pay consistently, reducing your practice's bad debt.

Use Digital Payment Tools: Digital tools and self-service platforms can encourage timely payments. The right tools enable patients to make immediate payments or schedule them, reducing payment delays.

Communicate Clearly and Proactively: Provide follow-ups and reminders. Make it easy for patients to reach out for clarification, and highlight how your practice calculated patient fee estimates. That transparency helps justify costs and helps build trust.

When you pair these patient payment collection strategies with transparent estimates, you can maximize collection rates. It's all about providing transparency and being upfront with your patients. When you let your patients know what to expect from a financial standpoint, you're setting them and your practice up for success.

Implementing Effective Healthcare Payment Estimates in Your Practice

Creating accurate patient fee estimates is easier than you may think, but it requires technical precision. When developing estimates, you must consider insurance eligibility, patient history and payer contract rates.

Begin by verifying insurance coverage and patient eligibility. Real-time insurance verification tools can do this in minutes, helping you check fine details like copays, deductibles, coverage limitations, pre-authorization requirements and more, all from a CPT code level. Next, use updated fee schedules while considering payer contract rates. Relying on fee schedules can help prevent discrepancies between what your practice expects to collect and what the patient actually owes.

Finally, review a patient's history. Doing so can help generate more precise estimates while anticipating potential variations in service needs.

Fortunately, there are many great tools available to help practices like yours generate healthcare payment estimates. Software like Fuse automates the process, performing insurance verification before using that granular benefits data to create patient cost estimates.

Whether you do things manually or let technology take over, staff training is crucial. Front desk staff should understand how your estimate process works, enabling them to communicate effectively with patients. Staff should know how to explain calculations and clarify that actual costs may differ. They should also learn how to review payment options and handle patient questions with confidence, further building trust.

Optimizing Patient Responsibility Collection Through Transparent Pricing

Patient payment responsibilities continue to grow. As mentioned earlier, per-capita healthcare spending is on the rise. However, how much individuals pay is also increasing. Since 2000, the patient portion of healthcare payments rose by 30 percent. A growing number of patients are now on a high-deductible health plan, resulting in greater out-of-pocket costs.

For healthcare providers and practices, clear communication and pricing transparency are key to strong collection rates. Your practice should present estimates early in the patient journey, prioritizing both accessibility and understanding.

The best approach is to present estimates in plain language, avoiding complex medical jargon. Highlight patient responsibilities, use visual aids and present payment options upfront. To provide additional clarification, ensure that staff are available to communicate with patients across different channels. Train staff to communicate empathetically and confidently, and consider implementing pricing estimates with digital payment tools to encourage action.

Start Improving Your Collection Rates Today with Better Fee Estimates

Improving collection rates can transform your practice, setting it up for greater financial success and stability. While many patient payment collection strategies can move the needle, offering upfront pricing estimates and greater transparency packs the biggest punch. Implementing estimate systems that prepare your patients for the financial aspects of healthcare can lead to impressive returns, with practices enjoying a 15 to 40 percent improvement in patient responsibility collection rates.

Fuse is a tech solution that automates estimation calculations, streamlining your workflow and improving estimate accuracy. Fuse dramatically reduces administrative burden while paving the way to a far better patient experience. With real-time insurance verification, automated onboarding and precise patient price estimates, you can't go wrong. 

Schedule your Fuse demo today to learn more and see price estimation automation in action!

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