There is a lot of outstanding medical debt in the United–about $81 billion of it, according to a 2016 report. And while that number sounds big, it's probably significantly bigger than you're imagining as you read this.
Anytime we, as humans, start dealing with numbers in the billions, our ability to appreciate the sheer size of the number tends to fly out the window. We think, "Wow, that's really big!" but we don't understand just how big "big" really is.
Putting $81 Billion in Perspective
A helpful way to put the size of numbers in perspective is by attaching them to a measurement of time that we think of as incredibly short: the second.
We all know that there are 60 seconds in a minute. But did you know that there are 31,536,000 seconds in a year? This means that if, for some strange reason, you wanted to count to 31 million, and you counted at an average pace of one number per second, it would take you one whole year, without stopping to eat, drink, or sleep, to reach 31 million.
Now, how long would it take to count to 81 billion?
About 2,569 years.
So yeah, the amount of outstanding medical debt in the United States is gargantuan.
And if we're being honest is it really that surprising? Considering that a 2016 TransUnion report found that bills amounting to less than $500 weren't paid in full 68% of the time–and that payment rate does not get better as the bills grow in size–it probably shouldn't surprise any of us that our national medical debt load is through the roof.
Still, while it might be somewhat helpful to understand how massive that $81 billion number really is, it doesn’t actually help individual providers and clinics understand the impact that uncollected medical debt is having on their paychecks and their P&L's.
How Uncollected Medical Debt Impacts Individual Providers and Clinics
To help explain that very real impact, here's some quick and dirty math showing just how much revenue family medicine clinics are, on average, missing out on each year.
First, we need to look at how much physicians fail to collect each year. To offer a clear picture, we've broken it down by how much the best-collecting, worst-collecting, and average-collecting physicians fail to collect each year.
The best-collecting physicians (80th percentile) still fail to collect $8,000 annually, while average-collecting physicians (50th percentile) fail to collect $23,000 annually. The worst collecting physicians (20th percentile), on the other hand, fare significantly worse, as they fail to collect $66,000 annually!
What does this mean for clinics? Well, that depends on how well the clinic collects. The average family medicine clinic has about seven physicians, so a clinic full of average-collectors is likely missing out on $161,000 of annual revenue. Meanwhile, a clinic that really struggles with collections is likely missing out on nearly $500,000 of annual revenue! Still, even the best-collecting clinics are likely missing out on more than $55,000 of annual revenue.
What that exact number looks like for your clinic will depend on a wide variety of factors, but the helpfulness of this exercise is found in realizing just how big of an impact uncollected medical bills can have on your practice.
Because even if your practice collects reasonably well, you could still end up losing out on a whole salary’s worth of revenue!
What to do next?
If this article left you feeling a bit worried about the revenue that your practice could be losing, know that you're not alone. In 2019, nearly two-thirds of providers claimed that patient receivables were their primary revenue cycle concern.
Fortunately, with Peachy’s help, your clinic can become an elite patient payment collector. Our flagship product, Peachy Pay, seamlessly integrates into your existing workflows and EHR/PM systems, enhancing your collection capabilities by adding frictionless digital payments, flexible payment plans, and positive credit reporting.
Payment collection shouldn’t be a hassle, and with Peachy, it isn’t. To find out more about Peachy Pay, schedule a demo!