The ROI of accurate healthcare address validation: Stop hemorrhaging red on your financial statements

ROI of accurate healthcare address validation piggy bank hero image

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January 8, 2025

Healthcare address validation pros and cons

There’s a pro and a con associated with having (or not having 🫣) accurate address data in your healthcare systems. Below, we’re going to break down the financial losses your organization is likely facing by not cleaning up your data sets with healthcare address validation solutions.

Don’t freak out yet, though. We’ll also provide you with the best ways to combat those losses and show you the type of serious cash growth you could expect in your ROI from making a slight adjustment to your address data hygiene.

Con: Increased claim denials and organizational costs

Unstandardized or unvalidated address data can cause your organization to have to rework denied claims, costing your organization time and money:

Rework cost per denied claims range from $25 to $118.
Approximately 10% of claims are denied. However, we recognize that some of those claim denials are not strictly related to address data. Research shows that 86% of denied claims are attributable to administrative mistakes, such as missing or incorrect patient data. We’ll update our number to be a conservative 8%.
For a smaller organization, processing 40-60 claims annually can cost $75 - $590. Bye-bye, company lunch.
For a hospital processing 100,000 claims annually, reworking denied claims could cost between $200,000 - $900,000. Barf.

Pro: Reduced claim denials and reprocessing costs

Document being approved

Claims with incorrect patient address information are more likely to be denied or delayed. Each denied claim costs time and resources to resolve, directly impacting revenue. Accurate address validation in healthcare reduces these denial rates, leading to faster payments and fewer costly reprocessing efforts, boosting revenue.

Do you know how little it costs to automate clean addresses? See pricing here. Investing in healthcare address validation solutions may be the highest ROI decision you’ll make all year.

Every penny counts in the long run, so why not add those bolded numbers from the previous section to your income column instead? Wahoo! Feels good to watch the cash grow.

Con: Increasing patient match error rates

Inaccurate address data means you likely have duplicate records for one patient. This is sadly costing you money:

The estimated cost per duplicate record in your system is $40-$50.
The typical duplicate rate is 20% in healthcare systems with multiple facilities.
For smaller organizations, every 100 unstandardized and unverified records result in $500-$1,000 in losses. Yikes.
With larger organizations, for every 1 million unstandardized and unverified records, the cost equates to $8-$10 million in losses. Ouch.

Pro: Improved patient matching and data quality

Physical addresses are essential for accurate patient matching across systems, reducing duplicate or fragmented records. Clean, standardized address data helps prevent costly errors in patient identification, leading to smoother operations and fewer billing issues. Accurate patient data also reduces administrative burdens, saving time and resources that directly impact the bottom line.

Look at the bolded numbers above and recognize that if you don’t have to pay that, you get to pocket that cash instead of experiencing painful seeping leaks in your ROI. Feels better, right?

Con: Complicated billing and collections processes

Not being able to get paid for the services your institution provides to patients in a timely manner also has hidden, treacherous costs:

Repeated billing efforts and follow-ups can cost providers between $7 and $9 per invoice.
Additionally, managing those overdue accounts requires additional staff time, likely costing between $25 and $50 per hour.
Delayed payments from patients can disrupt your organization’s cash flow, forcing you to rely on credit lines with interest rates around 5%-15%. This math is a little harder to calculate, so we’ll leave it out of our final tally, but understand that if you frequently rely on these lines of credit, that’s a huge waste of money that can be greatly reduced by updating and verifying your address data.
- Remember that funds tied up in receivables cannot be invested in facility improvements and technology upgrades, which can result in substantial losses over time.
Uncollectible accounts are written off annually. 2%-5% of net patient revenue is now relabeled as bad debt.
- For a facility with $100M in annual revenue, this equates to $2M - $5M in losses.
- For a smaller business bringing in $5M in annual revenue, this equates to $100k - $250k in losses.

Pro: Streamlined billing and collections capabilities

Billing statements and payment reminders rely on accurate address data to reach patients promptly. When bills are delivered to the right address, the likelihood of timely patient payments increases, improving cash flow. This accuracy reduces outstanding balances and write-offs, leading to a stronger financial position.

Those bolded potential losses just don’t have to be there. Let’s add that to your revenue column. Then take some of it out and toss it in the air or “make it rain,” like in those terribly cringy hip-hop videos from the 90s… for funsies!

Con: Exposure to legal liabilities

Disappointed judge

Listen, you REALLY don’t want healthcare’s big brother to come after you for sending sensitive patient information to the wrong place… do you?

Civil penalties are ranked in tiers depending on your awareness of the violations
- Tier 1: Minimum fine of $141 per violation and an annual cap of $2,134,831.
- Tier 2: Minimum of $1424-$71,162 per violation and an annual cap of $2,134,831.
- Tier 3: Minimum of $14,232 to $71,162 per violation with the same annual cap as the previous tiers.
- Tier 4: Minimum of $71,162 per violation with the same annual cap.

**That is a lot of dough for just the civil penalties. And there’s more where that came from. OH BOY!

Criminal penalties also come in pretty tiers to give real tears to offenders
- Tier 1: Up to $50,000 and one year behind bars.
- Tier 2: Up to $100,000 in fines and up to 5 years behind bars.
- Tier 3: Up to $250,000 in fines and up to 10 years behind bars.
  
  **In addition to these penalties, don’t forget the legal costs!
Legal costs for court representation can reach into the "hundreds of thousands of dollars" category. Settlements are no cheaper. One healthcare provider agreed to a $3.6M settlement following a data breach that compromised patient info. You hopefully aren’t being THAT negligent with only having bad address data, but you never know… It’s worth mentioning, although we won’t add it to the final total shown below.
Don’t forget the reputational damage. We can’t accurately quantify the financial repercussions of this, but you should know that this is also a figure we don’t include in the final total for this area, and you should still be wary of it. Cancel culture is real and quick.

All in all, this is one category where the size of your organization doesn’t really matter. If you break the law of patient privacy, you get slapped with the costs. If we total every quantifiable area up, our losses in this category can range from $210,141 to $7,484,831. Don’t pass away. We know it’s a big number.

Pro: Enhanced regulatory compliance and risk aversion

Compliance with regulations like HIPAA requires healthcare organizations to ensure that sensitive information reaches the correct recipient. Address validation in healthcare minimizes the risk of breaches or fines associated with sending protected health information (PHI) to incorrect locations. Address verification reduces potential legal and financial liabilities, preserving revenue and enhancing ROI.

Con: Misplaced market strategy

This might not feel like a big deal at first, but let’s look deeper into that magnifying glass again:

Wasted marketing campaign resources are multi-faceted
- Undeliverable mail costs can reach $750 losses per every 10,000-piece mailing with a 5% bad-address rate for printing and postage.
- Digital campaign costs can reach ~$2,000 if inaccurate geotargeting results in a 20% waste on a $10,000 ad spend.
Missed patient acquisition occurs when bad address data misses the target market. For example, if 100 new patients are missed annually due to incorrect addresses, the revenue loss could be $300,000 - $1,000,000 for the average lifetime value (LTV) of $3,000-$10,000 per patient (depending on the specialty).

Overall, this category holds a whopping potential loss of $50,000 to $1,000,000 depending on the scale of marketing campaigns, patient LTV, and the severity of the data inaccuracies.

Pro: Data-driven decision-making and market insights

Team making decisions

With reliable address data, healthcare providers can perform accurate geographic analyses, identify patient trends, and target outreach efforts effectively.

For instance, understanding where high-demand patients live can inform expansion strategies, resource allocation, or marketing campaigns that drive patient acquisition and satisfaction. This strategic use of address data supports growth and optimizes investments in new locations or services.

Accurate addresses enable better patient communication, including appointment reminders, care instructions, and follow-ups.

Epilogue: Avoiding the pain by getting healthcare address validation

Let’s do some quick math.

Cost of bad addresss data in healthcare table

For small to medium competitors:

Cost of bad addresss data in healthcare table for small organizations

It should be painfully clear to you and your bank account that bad address data doesn’t just make life a little more difficult for you and your patients; it’s literally burning through your cash. The worst part? If this is happening to your organization, it’s entirely avoidable by implementing a healthcare address validation software like Smarty’s.

Why haven’t you made the move or upgraded to Smarty’s top-tier service?

With reliable address data, healthcare providers can perform geographic analyses, identify patient trends, and target outreach efforts effectively. For instance, understanding where high-demand patients live can inform expansion strategies, resource allocation, or marketing campaigns that drive patient acquisition and satisfaction. This strategic use of address data supports growth and optimizes investments in new locations or services.

Additionally, timely communication improves patient satisfaction, which is critical for patient retention and the number of stars your facility or organization is rated. Higher retention rates and patient ratings contribute to a more consistent revenue stream, improving long-term profitability.

Finally, so many high-cost security risks are avoided by ensuring your patient address data is accurate.

Implementing automated address data solutions costs a tiny fraction of what you can save. See pricing here. Of all the investment decisions you can make this year, can any compare to the one you’ll make in clean address data?

Keep your financial statements from bleeding out. It’s time to scrub your address lists, verify your data, and watch those numbers shift from red to green. The bottom line: everyone loves a good comeback story, and healthcare address validation is the way to see your bottom line go from red to black.

Go write your comeback story with a little help from us.

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