The Hidden Cost of Not Having an Automated Patient Financial Management Strategy in Behavioral Health

Behavioral Health Providers play a crucial role in providing necessary medical and mental health
services to a traditionally unserved community in healthcare. Most of these Behavioral Health
Providers struggle with a critical yet often overlooked challenge: patient financial management.

Patient out-of-pocket costs are growing, inducement compliance requirements are getting
stricter, and Payers are being more aggressive with their auditing. While the immediate impact
of missing electronic financial records may seem limited to revenue loss, the hidden costs can
be far-reaching affecting patient care, operational efficiency, long-term sustainability, and
avoiding claim clawbacks.

The Financial Strain on Behavioral Health Providers

In 2025, approximately 20-25% of all net patient revenue owed to Behavioral Health Providers
is patient financial responsibility (“PFR”), in the form of deductibles, co-pays, co-insurance, and
private pay. The absence of electronic financial records for creating visibility and automating
the patient’s financial experience across all departments has resulted in the industry collecting
only 13%-15% of PFR owed. Current manual processes lead to inaccurate billing, lack of
transparent pricing, and ineffective collection processes. When these issues persist, it is
virtually impossible to have a sustainable business when 20-25% of the revenue owed to the
Provider is never paid.

Diminished Quality of Patient Care

Lost cash flow from unpaid patient financial responsibility also causes concerning consequences
on patient care. When Providers experience revenue shortages they may be forced to cut costs.
This can lead to:

• Reduced staff-to-patient ratios, increasing the burden on healthcare providers and
  lowering the quality of care.
• Delays in obtaining necessary medical supplies and medications.
• The inability to implement advanced treatment methods and technologies.

Electronic financial records allow for accurate transparent PFR estimates, targeted healthcare
financial literacy counseling, and targeted payment programs to make treatment be and feel
more affordable. A poor financial experience and the absence of this automation can create
financial stress for patients, which is a known primary cause of relapse.

Increased Administrative Burden

A lack of electronic financial records automation across all departments creates a dependency
on paper and spreadsheet management that is prone to human error, lack of visibility, and a
higher manual administrative workload. Staff members may need to dedicate excessive time
and resources to correcting patient billing errors, managing patient payment plans, and
handling collection efforts and patient inquiries. This not only diverts attention from patient
care but also contributes to employee burnout and turnover.

Legal and Compliance Risks

Besides an unprecedented decline in reimbursement rates across most Payers, the Payer
community has been increasing the frequency of audits in an effort to clawback claims.
Inducement violations are some of the most common causes for regulatory enforcement and
claim clawbacks. The burden of proof for inducement compliance rests with the Provider, so
the lack of electronic financial records can expose a Behavioral Health Provider to severe legal
and compliance risks. Failure to adhere to inducement regulations and consumer protection
laws can result in fines, lawsuits, and damage to a Provider’s brand reputation. Regulatory
violations can also lead to loss of accreditation, further jeopardizing the facility’s ability to
operate effectively.

The Path to Visibility & Financial Stability

To mitigate these hidden costs, Behavioral Health Providers should develop an automated
patient financial management strategy using electronic financial records to create visibility into
patient financial responsibility risk, cost transparency for patients, and workflow automation for
staff members.

• Transparent Pricing: Providing clear and upfront PFR cost estimates to patients to
  reduce confusion and improve payment compliance.
• Improved Financial Experience: The delivery of transparent pricing, targeted
  healthcare financial literacy education, and flexible payment programs that creates
  a patient financial experience that drives more alumni referrals and alumni re-
  admissions.
• Efficient Payment Collection Systems: Offering automated flexible payment
  programs and digital payment options to enhance PFR revenue recovery.
• Staff Training and Support: Creating automation and educating administrative &
  clinical staff on best financial practices for patient financial engagement will create a
  culture that prioritizes the importance of patient financial management to the
  organization.
• Utilizing Technology: Leveraging electronic financial records to automate
  processes and reduce human errors.

It is hard to solve a problem you cannot see. Electronic financial records provide organizational
leadership the visibility necessary to automate & manage patient financial responsibility risk
with the same discipline and predictability that electronic medical records manage clinical and

claims risk. By proactively eliminating the hidden costs of patient financial management,
Behavioral Health Providers can improve their financial health, enhance patient care, and
ensure long-term sustainability.