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Patients' demographics, and its effect on the revenue cycle

If Kenny Rogers and Mike McDermott taught us anything about how to play poker, it’s that you need to know the players at your table. Kenny famously sang about knowing when to hold ‘em and knowing when to fold ‘em, and Matt Damon famously quipped as Mike McDermott in Rounders “if you can’t spot a sucker at your table in the first half-hour, then you are the sucker.”

The same dynamic is true when collecting from individuals with unpaid medical debts. NBC famously reminded us “The More You Know” and G.I. Joe taught us that “Knowing is half the battle.” The more you know about a consumer, the more likely you are going to be able to help that person. And these days, when it comes to medical debts, collection agencies and revenue cycle management firms need to know where their consumer lives — is it an urban or a rural area? Because that is likely to have the largest impact on determining whether the person will be able to pay off that debt.

In many cases, individuals who are treated at rural hospitals are subsequently transferred to hospitals in more urban areas, which have specialists and more facilities than rural hospitals, which are aimed at stabilizing patients. When a patient’s health insurance is used, it is used for the most recent treatment, and that leaves the rural facility, which treated the patient first, left to collect the patient’s co-pay or deductible.

Many of the patients coming from rural areas do not have health insurance at all, forcing rural hospitals to devote more of their revenue to uncompensated or charity care, which hurts the facilities’ margins and makes it harder for them to stay in business. This is a large reason why more than 100 rural hospitals have closed in the past decade.

While 20% of the population of the United States lives in what would be defined as a rural area, only 11% of the doctors practice in those areas. And only one in 20 incoming medical students are coming from rural areas, which means that 11% figure is likely to drop. These statistics illustrate why the mortality rate in rural areas is 23% higher than it is in urban areas. ([Disparities between care in rural, urban areas getting worse | Healthcare Dive](https://www.healthcaredive.com/news/disparities-between-care-in-rural-urban-areas-getting-worse/568360/))

From a bad debt perspective, knowing whether an individual lives in a rural or urban area can go a long way to helping understand the individual’s financial situation and likely ability to repay a debt. There might not be a more important predictor of a patient’s ability to repay a debt than his or her address. Revenue cycle managers, collection firms, and healthcare facilities need to understand this dynamic to help them better assess a patient’s ability to repay a debt and what repayment options would be most likely to result in a payment in full.

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