Running head: SOLUTION TO BAD DEBT ISSUES IN HEALTH CARE

Solution to bad debt issues in health care

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Solution to bad debt issues in health care

Bad debts for organizations directly relate to insurance rates, income levels, and health
organizations service provision. Due to the high costs of treatment, many health institutions
have hard difficulties in ensuring that their budgets are not operating on deficit cash balances.
Many of the people being treated do not have enough money to cater for their health care
services resulting to high debt turnovers for the institutions (Weissman, et al., 1999). Nonpayment for health services by patients is one of the major causes of deficit budget for many
health institutions. It is, therefore, very important to develop ways in which these costs can be
reduced either within or outside the health care institution.
Health insurance program is one of the most effective solutions that health institutions describe
as having a reducing factor on the costs. Despite this thought, not all people are engaged in
health care insurance due to factors like low income making insurance unaffordable, high
premiums charged by the insurance companies and many others. It is, therefore, necessary to
develop ways in which health insurance can become affordable and thereby encourage people to
purchase the product. The solution to non-insurance can and is being reduced by increasing
income for the population. When people have a higher income, their ability to purchase health
insurance is greatly boosted. Low-income for at least 40 million Americans has contributed to
the low levels of insurance in the country (Smith, & Medalia. 2014). Health institutions and the
government should, therefore, work together in the process of encouraging more participation of
individuals in health insurance. The government is underway to improve the ability of people to
secure insurance through wage increments and job creation (AHRQ, 2002). Since many people
avoid insurance purchases due to low income or lack of employment, a change in their income
regime with more focus on increasing and redistributing income will change the scenario. When
peoples income is boosted, under the new legislation in known as the welfare reform law, states

Solution to bad debt issues in health care

will be required to provide medical coverage to all families meeting the income level ().
Therefore increasing peoples income may help increase the insurance rates for the whole
populations and thereby reduce costs incurred by the medical institutions through bad debts
accruing from non-payment for health services.
Another possible solution to addressing the problem of bad debts in health organization can
become achievable through improving the billing practices (Cleverley & Cameron, 2003).Bad
debts accrue due to the failure of patients to pay or evade payment of their bills. Developing a
system in which patients pay directly and immediately after service delivery can greatly reduce
the accumulation of debts. Despite the ethical practice of ensuring that patients receive services
despite the costs, a more brilliant debt collection method should ensure that patients receive the
best quality services at lower cost. It is evident that many patients are taken to the emergency
room when it is not even necessary. Avoidance of services that do not add value to the patients
health would greatly help reduce the costs and expenses incurred for health services.
Healthcare institutions are all faced with the issue of accumulated bad debts that accrue from
unpaid service. The government and all healthcare should work together in ensuring that the
costs of treatment are low and affordable to the patients. They should also ensure that patients
participate in health insurance so that to reduce the chances that these costs can go unpaid
impacting negatively to the institution.

Solution to bad debt issues in health care

References
Smith, J. C., & Medalia C. (2014), Health Insurance Coverage in the United States: 2013-p60-250, pdf.
Retrieved on 25 August 2015 from:
https://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-250.pdf

Weissman, J. S., Dryfoos, P., & London, K. (1999). Income levels of bad-debt and free-care
patients in Massachusetts hospitals. Health Affairs, 18(4), 156-166.
Agency for Health Research and Quality AHRQ. (2002). Reducing Costs In the Healthcare
System: Learning from What Has been. Retrieved from
http://archive.ahrq.gov/research/findings/factsheets/costs/costria/costria.html
Cleverley, W. O., & Cameron, A. E. (2003). Essentials of health care finance. Jones & Bartlett
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