Inflation: Bad for Patients, and Not So Good for Providers, Either

The Effect of High Inflation on
Your Ability to Collect 

A combination of the global supply chain crisis, unexpected demands for certain goods (think, toilet paper), and the increased amount of currency in circulation have created a “perfect storm” for rampant inflation.

But regardless of its causes, what effect can you expect inflation to have on the cash flow of your medical practice? 

Problem for Providers

Here are a few reasons high inflation is troublesome for medical practitioners:

Many people believe that all inflation harms everyone financially, but this is a misconception.

In fact, a small and predictable rate of inflation is generally considered not only acceptable but good. That’s because it offers a hedge against something far worse: deflation.

If the inflation rate hovers too close to zero, the risk of deflation (negative inflation) is increased. And that’s when a deflationary spiral can turn hard times into an economic recession or depression.

• Inflation will increase operating costs, especially labor. The current staffing shortages have already resulted in higher staff salaries, overtime pay and temporary worker costs. High inflation will exacerbate these challenges.

• More patients will delay elective care or default on their medical debts, as they struggle with the higher cost of basic necessities.

• The money received from patients who have arranged payment plans -- particularly, longer-term plans -- has decreasing value over time. (In other words, cash now is worth more than cash later).
  

Impact to Patients

While high inflation rates can have some positive effects on some consumers, most of the repercussions to your patients will be negative.

For instance, as inflation increases, so does the interest rate. This means that consumers who are paying car loans and mortgages at a fixed rate of interest will benefit, since the money they’re paying back is worth less than the money they borrowed. But this benefit will probably be nominal unless they also receive an inflationary wage increase.

In addition, patients who owe on variable-interest loans -- such as those with significant credit card debt -- will end up paying out more because of the higher interest rate.

1. Venezuela — 284.4%
2. Sudan — 260.2%
3. Lebanon — 208.1%
4. Syria — 139.0%
5. Zimbabwe — 96.4%
6. Suriname — 61.5%
7. Turkey — 61.1%
8. Argentina — 55.1%
9. Iran — 34.7%
10. Ethiopia — 34.7%

 Source:  Trading Economics

Billing 

Help your patients to better understand their medical bills and payment options. (See “Improve Collectability with Patient-Friendly Billing®.”) And keep your invoicing timely to help minimize revenue cycle issues.

Payment Options 

Provide upfront estimates, with links to appropriate payment plans and methods.

This would not only keep recovery cash flowing, it could also motivate patients to proceed with elective care they might otherwise have deferred.

Make sure your payment plans are flexible and accommodating. Offer multiple payment tools, such as an online portal, to simplify ease of payment. You may also consider:

• A prompt-payment discount for paying within a certain time frame;

• Extending the payment term;

• Allowing patients to pre-pay in installments prior to a large, planned medical expense (such as childbirth); and

• Offering some basic services at a flat rate for self-pay patients.