TransUnion: Latest Recession Negatively Impacting Healthcare Organization Balance Sheets More Than 2001 Economic Recession
CHICAGO, IL--(Marketwire - April 13, 2010) - A new TransUnion healthcare survey found that approximately three in four respondents said the current recession has negatively impacted their balance sheets more than the 2001 recession and that the number of uninsured and underinsured patients continues to be a major issue for the healthcare industry. Completed in February, the survey represents 46 healthcare organizations and operations in all 50 states.
According to the survey, nearly every respondent (96 percent) said their healthcare organization is experiencing a rise in the uninsured/underinsured patient population. More than 41 percent of healthcare administrators stated that the increasing uninsured/underinsured population was the most important issue facing their organization. Other issues ranked as the most important included: an inefficient collection process at the front-end and back-end of the revenue cycle (17 percent), multitude of financial assistance programs and rules (15 percent), higher co-pays and deductibles (13 percent) and more regulatory scrutiny (13 percent).
"Notwithstanding the recent passage of healthcare reform bill, with the unemployment rates still at near-historic levels it is apparent that healthcare organizations will continue to face challenges with the increasing uninsured patient population," said Milton Silva-Craig, executive vice president of TransUnion's healthcare business unit. "Our survey reinforced the fact that hospitals and other healthcare-related offices are in search of ways to manage their rising debt caused by the increasing uninsured population, changing healthcare plans and the realities of greater out of pocket payment liabilities for patients."
In many cases, the impact to a healthcare organization's bottom line comes down to their self-pay patients' ability to pay, and in a timely manner. To date, the weighted average of a consumer becoming 90 or more days delinquent on any credit obligation is at an all-time high in the United States. TransUnion's Credit Risk Index, a statistic developed to measure the changes in consumer credit risk, has elevated more than twice as much in the current recession as compared to 2001. "What this means for healthcare organizations is that it is more important than ever to develop strategies to effectively manage the collection of receivables from self-pay patients," continued Silva-Craig.
The Credit Risk Index increased from 118.38 at the end of 2007 (the beginning of the latest recession) to 129.67 at the conclusion of 2009 (the latest data available). This represents a 9.54 percent increase in the Index. Between the first quarter of 2001 (the beginning of the last recession) and the fourth quarter of 2001 (the recession ended in November of that year), the Credit Risk Index only increased 4.34 percent from 109.77 to 114.53.
"The current level of the Credit Risk Index characterizes the turbulence and the economic hardships faced by consumers during this latest recession," said Chet Wiermanski, global chief scientist at TransUnion. "Though the Credit Risk Index is showing signs of finally beginning to level off, it is important to understand that consumers are more than 18 percent riskier today than they were at the beginning of the 2001 recession, a condition that is filtering down into many different industries, including healthcare."
The volatile economy also may have played a role in survey findings that indicated 83 percent of respondents have seen self-pay patient populations at their healthcare organizations increasing in the last 12 months. The remainder of the respondents indicated this population remained about the same. Robert LeWinter, the vice president of Regional Claims Recovery, an extended business office of North Shore-Long Island Jewish Health System, said the recession has played a role in this increase. "The distressed economy and years of rising premium costs have undoubtedly contributed to the growing uninsured population. Fiscal policies now are a balancing act between cash maximization and bad debt reduction. Enhanced and early charity care identification play a critical role in self pay account resolution by reducing what was previously inflated bad debt, while complying with regulatory required care to the uninsured. We have also experienced a cash realization on charity reduced accounts that previously were unpaid and written off as bad debt."
Approximately two-thirds (65 percent) of survey respondents indicated their healthcare organization had a bad debt percentage between one and five percent. About 23 percent of respondents indicated they had bad debt percentages between 5.1 and 10 percent. Decreasing bad debt was found to be the No. 1 objective by survey respondents. Nearly 35 percent of respondents rate this as their most important objective, followed by increasing collections at the time of service and post discharge (26 percent) and improving operational efficiencies (20 percent).
Other key findings from the survey include:
- Nearly 85 percent of respondents believe their healthcare organization has already made the appropriate changes to ensure it tracks charity care properly as a result of IRS Form 990, Schedule H.
- More than three-quarters of respondents (78 percent) believe their healthcare organizations will invest in technologies to improve the efficiency of their revenue cycle in the next 12 months.
"In light of the dynamic nature of the healthcare industry, highlighted by the passage of healthcare reform, it's vitally important for hospitals and physician offices to leverage various data elements and trends, and utilize new technologies that will enable them to improve efficiencies and manage their balance sheets so as to be able to appropriately provide services to their patients and the communities they serve," said Silva-Craig.
TransUnion Credit Risk Index
The Credit Risk Index is defined as the weighted average probability of 90-day delinquency or worse among consumers in a given region relative to the nation as a whole. The Credit Risk Index uses the fourth quarter of 1998 as a baseline for comparison. TransUnion considered 1998 as a representative year of credit performance within the usual dynamic of the historical credit cycle. A value of more than 100 represents a higher level of relative risk. For comparison purposes, the Credit Risk Index in recent years has generally ranged between 110 and 120, experiencing a one- or two-point shift between quarters.
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs more than 3,600 employees in more than 25 countries on five continents. www.transunion.com/healthcare
Graphics and/or photographs to accompany this release can be obtained by members of the media by contacting Cliff O'Neal at 312-985-2540 or firstname.lastname@example.org or Dave Blumberg at 312-985-3059 or email@example.com.
E-mail: Email Contact
Telephone: 312 985 3059