Revenue Sources and Models
College health centers generally require institutional financial support. Several factors make it difficult for college health and wellness centers to attain complete financial self-sufficiency.
College health and wellness centers:
- Serve a population that tends to be under-insured or are covered by health insurance from a different state or country.
- Provide services highly utilized by a student population (acute care, primary care, mental health and preventative services) but poorly reimbursed relative to other health products and services.
- Serve a population with fluctuating demand for services, usually correlating with an academic year calendar. The fluctuating demand has inherent productivity/staffing inefficiencies, often increasing the cost per visit beyond the reimbursement amount.
- Usually utilize human resource systems set up for academic institutions, not health care delivery systems.
These factors contribute to the need for some financial subsidies from the college to maintain student health services. Mental health services/counseling centers are sometimes funded by a different source than the medical services. Counseling services are more commonly fully subsidized to reduce financial barriers for students seeking mental health care.
Common Sources of Institutional Funds for Subsidizing College Health Centers
Student Fee Allocation
Subsidizing college health and wellness centers through student fee allocations from general institutional funds or from a pool of student fees (separate from tuition dollars) is a common model. The fees are allocated to competing campus services or facilities through an annual budgeting process. The process varies from campus to campus, as does the input into the process allowed by the student health and/or wellness center administration and student leaders. Allocation of budget requests for health services may be determined by Student Affairs, Health Sciences, or campus Finance and Administration; thus, institutional priorities may significantly influence the allocation. On some campuses, the budget requests are funneled from health or wellness services through Student Affairs or Health Sciences. On other campuses, students conduct budget request sessions and recommend student fee allocations. The recommendations made by students have varying influence on the final fee allocation outcome. Regardless, in the competition for campus resources, student health and wellness centers must make a strong, data-based case for the use of student fees.
Essential data includes:
- Cost per visit or similar index of value for the student dollar.
- Utilization of the health or wellness service, including number of encounters and unique individuals that use the center in a given year.
- Quality indicators, including benchmarking data, quality studies, and patient satisfaction survey results.
- Effect of services on student retention.
Designated Student Health/Wellness Fee
Some campuses designate a student fee to support health and wellness services. In this situation, the fee is not in direct competition with other campus services, but health and wellness services must negotiate a fee amount and justify annual increases to the fee. Inflationary increases may be justified based on institutional annual salary increase policies, third-party vendors, facility and equipment needs, and desired service additions. Again, the essential data mentioned above may be needed to justify the requested increases.
One advantage of a designated fee is that the money is usually committed to fund student health and wellness services. A disadvantage of a designated fee is the increased accountability that a publicized fee brings. Parents and students have expectations associated with paying a designated dollar amount to support the services. Senior leadership should be well-versed in the scope of services supported by the fee health fee, including those services that are provided outside the traditional walls of the health/wellness center. Some campuses allow elective participation and payment of the designated fee, with the use of the health services contingent on fee payment or campus student health insurance enrollment.
Fee for Services (User Fees)
Many college health and wellness centers are required to earn a portion of their budget and will charge for some services, including office visits. Charging for services can create barriers to care, particularly if the charge or copay is high. Also, charging user fees has significant administrative costs. Leadership must be prepared to address the culture shift involved in implementing charges for services, as college health and wellness professionals may be philosophically resistant to charging fees for services if they perceive it as a barrier to student access.
Considerations When Implementing a Fee for Service System
Framework for Fee Structure
A decision about the philosophy regarding which services will be fully subsidized by institutional fees and which services will have fees applied is important to develop and communicate. For example, is it important to encourage the use of the service because early intervention and consistent follow-up improve health outcomes? If so, the charge or fee to the student should be kept as low as possible.
If it is a specialty service or considered medically “unnecessary” (such as cosmetic care), charges for the services may be acceptable. Fees for acute mental health care are often kept as low as possible to prevent any additional barriers to care. Office visits to a medical practitioner may be more likely to have an associated charge, as the evaluation and treatment is often taken care of in one or two visits. Charges are often applied to lab and x-ray services since the necessity of the service can be communicated to the student and sometimes become a negotiated aspect of treatment. No-show fees are commonly applied as a means of discouraging the practice. The agreed upon framework can be applied and communicated to the staff so that the process is perceived as fair and consistent.
Development of a Fee Structure
A standard or national fee scale can be used to determine the dollar amount to be charged for a service that will not be subsidized by institutional funds or student fees. If no third-party billing is involved, the cost of the service or test may be influenced by community rates or the cost of providing the services. If third-party billing is involved, a master fee schedule can be developed. The contractual (discounted) rate will be paid by the insurance vendor, and the difference between billed charges and rate paid by the insurance vendor will be written off from an accounting perspective. The master fee schedule may be based on a percentage added to Medicare reimbursement rates. Many charges in health care are based on potential third-party reimbursement rates, not on the cost of actually providing the services.
Fees for service are usually generated from evaluation and management office visit coding or CPT (procedures and testing) coding system. A master price list is created within the electronic health record or other billing system. The charge is applied when the visit is coded (along with diagnostic codes), usually by the practitioner during the visit.
Fiscal Justification for Fee-Based Services
A fiscal analysis should be performed and a financial justification for implementing fees for services developed. The analysis should include a projection of the annual or monthly revenue that will be generated. The projection should include an anticipated drop in volume of visits or tests ordered if charges for those services are applied. The additional administrative expenses incurred by implementing fee-based services can be subtracted and the net revenue estimated. A periodic assessment plan is essential to evaluate changes in the cost of providing the service and to ensure revenue goals are met.
Infrastructure for Implementing Fee-Based Services
The necessary infrastructure for implementing fees for services in a college health or wellness center will depend on the type of payment accepted for the services and the extent of third-party billing to be implemented.
Cash or credit card with no insurance billing:
Implementing cash or credit card acceptance for services involves setting up cash handling policies and procedures to protect the organization and acquisition of equipment to scan credit cards. Credit card processing fees will need to be taken into consideration and a payment system will need to be set up. Generally, an interface with the bursar/student accounting system, if not already present, will be set up to allow charges from the health or wellness center to be placed in the college accounts receivable/billing system. Since bills from the bursar are often sent to parents or a home address, itemization of charges/codes from student health and wellness is usually avoided. Instead, the charge posted is labeled as from student health or wellness, without specificity regarding the charges. Any itemization needed by the student for insurance purposes would be directly supplied to the student only.
Third-party/health insurance billing:
Implementing a system to bill a third party involves a significant commitment of administrative resources. An administrative system must be in place to credential providers, ensure proper coding and billing, and reconcile payments. Many health and wellness centers start with billing only the college-endorsed student health insurance vendor. The processes may be streamlined in this case, as most student health insurance vendors are familiar with the college health and wellness centers and may apply simplified rules and processes to facilitate reimbursement for services. If the billing strategy involves multiple insurance vendors, the process of contracting with multiple vendors, credentialing all providers with multiple vendors, and setting up an accounting system for reconciling the different contracted payment rates can be quite complex and labor intensive.