The Burden of Bad Debt & What You Can Do About It

Rural hospitals are struggling to stay afloat. Excessive bad debt has been the main reason for this. As a result, some hospitals have had to close down when they could no longer serve their patients due to limited resources and income. A recent study revealed that there have been  over 100 rural hospital closures over the last decade in the US.

If a patient appears to be a financial risk, you can creeate a payment plan or ask them to make a payment before treatment

In order to alleviate the burden of bad debt to hospitals, the leadership and CFOs managing the hospitals’ finances need to actively implement effective strategies so they can minimize it and ensure a profitable organization. 

1. Identify Potential for Bad Debt Early

Bad debt is inevitable, but hospital leaders can implement ways to identify bad debt potential as soon as they encounter a patient. For example, a hospital can create a system where patients pre-register before going through treatment, and their financial status can be identified in the process.


If the patient appears to be a financial risk, the hospital can create a payment plan or ask them to make payment before treatment. Pre-payment helps give patients information that helps them make better-informed decisions based on their financial capability, whether they are self-pay or insured. 


When bad debt identification is performed early, health systems can adjust their workflows and implement new mechanisms for working with patients on high-deductible plans or those without insurance.

2. Educate Patients on Other Payment Options Available 

Most times, patients fail to pay their bills because of not being aware of different payment options that they can use. If a self-pay patient cannot make the full payment for the health care procedures offered to them, the hospital can inform them of different alternatives. These may include offering to help patients find other sources of financial support, such as charitable organizations or loans, so that they can afford the treatments prescribed for them.


Additionally, some providers offer flexible repayment plans and low-interest rates, which increase compliance among patients with high deductibles who are worried about affordability issues when paying medical bills on time each month after their deductible has been met.

3. Understand the True Cost of Healthcare 

It is essential for financial leaders in hospitals to be well-informed on the actual cost of health care procedures and treatments. Often, they know the general figures, but are not specific enough to assess the total cost from consultation to treatment and the admission of drugs and anything else that may be performed on the patient. Having this accurate information can help leaders make decisions that ultimately lead to the reduction of bad debt. 

Take Control of Your Hospital’s Finances and Avoid Accumulating Bad Debt

The more bad debt your hospital has, the less revenue you will make, and the higher the risk of closure. When you implement better processes and financial policies in the hospital, bad debt can be mitigated, and in some cases, eliminated. Better debt management allows rural hospitals to provide better services to their patients and improve their facilities and services for an optimum experience for both the hospital staff and its patients.


At Ultimate Billing, we have a proven track record of getting results and completing functions like complete claims preparation and submission, denial management, and AR management to maximize organizational revenue. If you want to say goodbye to the cycle of bad debt in your hospital, don’t wait to get started. Set up a consultation with our team today!


Ultimate Billing exists to reduce the business burden of healthcare, allowing our clients to focus on patient care.

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