Executive briefing: The paradigm shift in healthcare – from business to consumer

Healthcare providers are becoming increasingly aware that today's patients have more control over how they obtain care and pay for it. Many providers now aptly view patients as "consumers," given the rise of high-deductible healthcare plans, increased access to mobile health and the desire for enhanced transparency in price and quality.

This content is sponsored by Zotec Partners. 

Physician groups have traditionally operated in a business-to-business model where patients' medical bills were predominantly paid by various government and private insurance payers. Physicians previously knew who to bill and what to expect in the way of payment from payers, but today's payer landscape has been transformed. As patients have been encouraged to take responsibility for the value of their healthcare purchasing decisions, so too have insurance companies used the notion of "consumer-managed healthcare" to shift the responsibility for payment to the patient by implementing HDHPs and health savings accounts. Now, many healthcare providers find themselves increasingly working in a business-to-consumer model, in which success hinges on their ability to transform and excel in their capacity to connect, bill and collect from thousands of individual payers rather than scores of corporate payers.

Recent statistics listed in a McKinsey Quarterly article confirm this, stating there has been a ten-fold increase in HDHP plans in the past seven years with more than 11.4 million people enrolled in such plans, and steadily growing. HDHPs are a driving contributor of the 68 percent increase in patient payment liability from $250 billion in 2009 to $420 billion in 2015. 1 This trend isn't expected to cease either, with average annual growth of out-of-pocket healthcare expenditures projected to rise to 5.5 percent by 2023 from 3.2 percent in 2013.

According to Joe McMurray, vice president of patient experience with Zotec Partners, "This rapid shift to outof-pocket healthcare expenditures is worrisome for hospital-based physician groups because the payment methodologies and systems used by many hospitals are outdated and inconvenient when it comes to payment transactions among the self-pay after insurance patient population."Hospitals and physician practices must quickly get up to speed as they meet the demands of the new patient-consumer, he added.

A Retail Approach

The new post-reform environment has healthcare providers taking on a more business-to-consumer approach as they face mounting pressures to provide revenue cycle processes that are more "retail" in design. Mr. McMurray notes that real-time adjudication and point-of-service collections with tangible and effective follow-up strategies are an absolute must for healthcare providers to interact with today's savvy patient-consumer. "As the role of the healthcare provider continues to evolve, so too will the way they handle payments," he notes.

Citing another relevant statistic from McKinsey Quarterly, Mr. McMurray says, "Of the $2.7 trillion the country spends annually on healthcare, $400 billion goes to claims processing, payments, billing, revenue cycle management and bad debt — in part, because half of all payer-provider transactions involve outdated manual methods, such as phone calls and mailings." 3 According to McMurray, providers must be more diligent as they take on the patient-consumer population, creating new and better ways to make patient bills more understandable, with easier and more accessible payment options.

"Zotec touches the patient multiple times, and through multiple channels in order to follow up for payment," he says.

Patient input becomes increasingly important to physician providers, who must understand patients' increasingly consumeristic behaviors and offer options that benefit them. Mr. McMurray remarks that physicians have to view the patient experience be yond clinical care, saying, "The revenue cycle is analogous to a retailer's check-out process in that it can either increase or decrease the likelihood of future encounters, even more so given these relationships are more emotionally driven than, say, buying groceries or taking a ride with Uber."

The new patient-consumer requires a more integrated approach in their interactions with hospitals and physicians. Therefore, the patient experience can and should be akin to the customer relationship management strategies that many retail and service-driven businesses employ, he adds.

Part of those strategies include accessibility to make purchases and payments outside of the retail environment, or in this case, outside of the physician office. "Point-of-service collections, while ideal, are not always the only way to obtain payment," Mr. McMurray suggests. "For patients, the clinical and financial experiences are one and the same, which is why providers have to be diligent on the back-end as well as the front-end."

Convenience = Payment

A critical question posed by healthcare providers recently is, where does the self-pay after insurance payment responsibility now lie? Is it with the patient or with the physician provider? Recent studies suggest part of the problem could lie in the physician provider approach, noting that 74 percent of insured consumers indicated they are both able and willing to pay their out-of-pocket medical expenses up to $1,000 per year. 2 So then, the next question would be, "How easy is it for the patient-consumer to make the payment?"

Follow-up protocols to patients are essential to collecting payment. As Mr. McMurray points out, "Following up with the patient-consumer should go far beyond traditional methods, which typically only include a statement, pre-collection letter and collection write-off."

Patient outreach tools have the capability to generate improved patient revenues for physician groups. The patient outreach methods used by Zotec include a dedicated patient portal, patient phone calls woven into the traditional billing cycle of bills and statements and multiple ways for patients to pay for their bills — including a new option for patients to receive a bill, view and update their account and make payment directly from their smartphones. "We are giving physician groups the ability to connect with consumers — especially younger generations that conduct business from their personal devices —– in a way that is revolutionary for the healthcare market," says Mr. McMurray.

Compliance with regulations that protect consumers' privacy is also a key component in patient-consumer communications, especially in regards to new mobile consumers and text messages, which are essential in today's communications efforts with patient consumers. "We legally rely on the demographic information patients voluntarily provide to hospitals and providers to ensure we have patients' most up-to-date express consent for text messages, as one example."

He suggests that companies should strive to ensure patient phone calls and text messages always comply with the Telephone Consumer Protection Act and the latest Federal Communications Commission regulations.

It is no secret that mobile usage has risen in recent years. Mr. McMurray notes that from a medical billing standpoint, physicians should take advantage of the prime opportunity to directly reach their patients. "Mobile technology gives physicians an ideal opportunity to engage patients in a platform that is most frequently used in near real-time," he says. According to recent statistics, Americans used mobile devices more than PCs to access the internet, 4 and the percentage of bills paid using mobile devices grew by 69 percent in 2014. 

Additionally, more than two-thirds of cell phone owners check their phones for calls, alerts and emails — even when haven't noticed it ringing or vibrating, according to a 2014 Pew study. 6 These statistics underscore the point that physicians should be taking advantage of a critical component to bill paying strategies. Mr. McMurray suggests notices and alerts are very useful throughout the entire patient experience, adding that patients can be reminded of their financial accountability during various points of a medical encounter, with access to electronic statements for payment throughout.

Either way, achieving payment would not be possible without effective tools and technologies that give physicians a way to more closely leverage the opportunity to enhance the patient billing experience. "The latest interactive voice technologies and patient portals are critical platforms that should be intuitive for patients, but ultimately, providers must take a multidisciplinary approach in patient engagement and employ a variety of tools that will suit all their consumers' preferences," says Mr. McMurray. He emphasizes that no patient is the same, and therefore the way providers engage them should not be "cookie cutter," either.

Meeting the Demands

We've established the paradigm shift in how patient payment responsibility carries over into a business-to-consumer reality for healthcare providers, and healthcare reform has forced physician practices to adapt to ongoing changes. The closing question for providers is, "How can you meet the demand for a multi-channel approach to patient billing and payment — in addition to the mobile options discussed earlier?"

A shared objective among healthcare providers and their revenue cycle management partners is to give the new patient-consumer population options to pay their bills at any step in the revenue cycle process — be it before, during or after a medical encounter and using a variety of methods and technologies. Physician providers must work hard to optimize patient payments in order to build integrity into their revenue cycle, viewing it as a large part of the clinical experience as well, with revenue cycle management partners often serving as trusted advisors.

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