Best practices for incorporating a patient financing program

In this age of high deductible health plans (HDHPs) and rising out-of-pocket expenses, patients often lack the income or savings to pay off their medical bills in full.

Sixty-four percent of patients actually stop paying their bills if there is still a balance after six months—which is embarrassing to patients and leads to bad debt for healthcare organizations.

Cost in general has become a barrier to access for many patients, where nearly a quarter of Baby Boomers and Gen Xers and almost a third of Millennials will avoid care due to the associated costs according to a recent survey.

Despite hospitals and health systems investing millions in patient engagement strategies and solutions, transparency alone may not be enough to solve this issue. Healthcare organizations are deploying standardized and sophisticated patient financing programs that can help patients pay their bills. Some have seen significant, positive results in patient satisfaction and financial outcomes.

Facilitating Patient Financing

Most patients already have their disposable income earmarked for other bills and priorities. If a patient has to choose between paying his or her electric bill and medical care, for instance, he or she likely will opt to keep the lights on and let the medical bill slip another month. As patients take on more and more financial responsibility, this is unlikely to change unless healthcare organizations become more proactive and think like other consumer-driven industries.

Car dealerships and appliance stores, for example, typically facilitate and offer financing options so big-ticket items like cars and refrigerators are more affordable to consumers. Hospitals and health systems are following a similar model to make healthcare more affordable to patients.

The following are strategies and best practices for hospitals and health systems to consider when developing a patient financing program:

Engage patients early. Healthcare providers should engage patients early to optimize patient payments. Ideally, this should be done before or during pre-registration, registration or at the point of care, so the organization doesn’t wait until the patient needs help, which could be weeks or months after service.

Assess payment history and propensity to pay. Hospitals and health systems should put their data to work and determine the patient’s propensity to pay based on results of benefits verification, out-of-pocket estimation and patient’s payment history. They then can shape discussions around the patient’s financial responsibility and point them toward payment and financing options.

Offer multiple payment options. It isn’t enough to offer one or two types of payment options. Providers need to offer multiple, systematic and scalable options to cater to each patient’s needs. For instance, some patients may choose to avoid paying interest and can afford larger payments over a short term. Where other patients choose to make smaller payments per month over a longer period of time through interest bearing accounts. Hospitals and health systems should ensure patients are aware of their options and help them navigate the sign up process.

Provide the flexibility to choose and adjust. In addition to offering multiple payment options, patient financing programs need to be flexible to a point, so patients can decide what will work best for them on a month-to-month basis if necessary. This should also be easy and convenient for them to do, whether in person, on the phone or online, so making their payments is as convenient and affordable as possible.

Partner with a patient financing vendor. Hospitals and health systems aren’t financial institutions. They generally do not have the in-house systems, excess human capital or regulatory licensor to efficiently deliver financing solutions that are legally compliant. By working with a patient financing vendor, healthcare organizations can tailor flexible financing programs to their patients’ needs, optimize the patient’s financial experience while focusing on their core business.

Getting Paid to Improve Satisfaction

When patients are provided an affordable method and convenient channel, they are more likely to pay their bills. For example, a North Carolina-based hospital system was able to reduce its bad debt by 27 percent over a three year period through flexible payment options.

Their program not only helped reduce bad debt, but it also helped increase patient satisfaction, where 30 percent of patients who used the program chose to use it again at a later time. The program’s Net Promoter Score was also rated a +55, far higher than most credit cards and other banking options.

With HDHPs on the rise and out-of-pocket spending expected to reach $608 billion in 2019, patient consumerism is here to stay. The American consumer is well conditioned to expect retail financing options for large purchase occasions. By offering flexible payment options through patient financing programs, hospitals and health systems can help reduce patient’s financial anxiety, ensure care is affordable and optimize patient payments while protecting their own revenue cycles. Not only will your patient A/R realize a big lift, your patients will be thrilled and will have another reason to choose your health system.

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