From getting by to getting ahead: How St. Luke's health system reimagined the patient experience and improved payment yields

In recent years, patients' direct financial responsibility for their healthcare expenses has increased significantly. Health systems now find themselves in the consumer lending business, which can result in financial difficulties because some patients never pay their medical bills. When patients fail to pay their healthcare bills, the financial impact on providers is profound. Many health systems are seeing operating margins dwindle due in part to the inability to collect patient payments. Experience shows, however, that improving the patient financial experience is an effective way to address this issue. Keys to success are integration with the EMR and the patient portal.

At Becker's 8th Annual CEO & CFO Roundtable in Chicago in November, VisitPay hosted an executive roundtable to explore the challenges around patient financial obligations and how to increase payment yields by improving the patient financial experience. Jeff Taylor, senior vice president and CFO of Boise, Idaho-based St. Luke's Health System, and Kent Ivanoff, VisitPay's CEO, discussed best practices and lessons learned in this area.

Healthcare's changing financial landscape

Many health systems are experiencing staggering margin compression amid declining reimbursements and an increased reliance on direct patient payments. According to Moody's, in 2015 nonprofit health systems had an average operating margin of 3.4 percent. In 2016, that figure dropped to 2.7 percent. Even a 5 percent increase in revenue from consumers can be devastating, since leakage in recovered revenue wipes out those margins. In 2017, Moody's found that one third of nonprofit health systems had negative operating margins.

According to Mr. Ivanoff, there are two primary reasons why patients don't pay their healthcare bills, even if they can afford to pay. "The first issue is that people don't understand what they owe and why. The second concern is that the average median American household on a high-deductible health plan can't pay $5,000 over 12 months, even with no interest. They need more flexibility to pay over time," he said.

Collections calls aren't the way to fix these problems. Instead, health systems must improve the patient financial experience. When healthcare organizations offer transparency and give patients flexibility, they behave differently.

"We believe that if you have access to the right data and a system, you can change the patient financial experience and see different outcomes," Mr. Ivanoff said. "If you fix the underlying problems, patients will pay you."

How St. Luke's reimagined the patient financial experience

When Jeff Taylor joined St. Luke's in 1995, the organization had around $125 million in revenue. By 2016, revenues had increased to $2 billion and today they are $3 billion. St. Luke's has made a significant move into value-based care. One third of its revenues are capitated and around 25 percent of the patient population is attached to St. Luke's through a multi-payer network called St. Luke's Health Partners.

"We are trying to create a unique patient experience," Mr. Taylor said. "Member attachment and consumer patient loyalty are extremely important. While the clinical experience is obviously critical, right behind that is the financial experience. As an industry, we haven't done a very good job with the patient financial experience."

In 2006, Mr. Taylor was promoted to CFO and three years later, he met Mr. Ivanoff. Mr. Ivanoff was focused on improving the patient experience and credit management in the healthcare space. "We embedded Kent in the rev cycle department and put VisitPay's tools in our system. Over the next six months, I learned a great deal about our accounts receivable, yield rates, payment patterns. I had more information at my fingertips than ever before," said Mr. Taylor.

Mr. Taylor noted, "What we need to do better as an industry is to understand the credit space associated with our patients and figure out how to better manage them." To engage patients in the financial experience, St. Luke's deployed VisitPay on top of Epic. Once a patient's bill is adjudicated, they receive a message on their mobile device that they can pay their bill online. Patients are offered different payment plans. For plans less than 12 months, no interest is charged. For 12- to 24-month plans, St. Luke's charges 4 percent interest. For plans over 24 months, it charges 8 percent interest.

VisitPay increases transparency for patients by integrating billing statements with explanations of benefits (EOBs), so people can see everything in one place, rather than receiving multiple bills and multiple EOBs. Mr. Ivanoff said, "For the first time, a patient can look at a provider bill, double click on it, see the EOB and confirm that it reconciles. With our technology, we bring the bills and the EOBs together."

The results have been impressive. The patient payment yield with VisitPay is 30 percent to 40 percent higher than when St. Luke's used Epic alone for billing. In addition, patients like the system and are more engaged in the process. St. Luke's Net Promoter Score — a measure of customer loyalty — is now 50, which is three times the industry average.

Mr. Taylor said, "Patients like the system, are more engaged in the process and we are getting higher yield rates. It's about getting them on a simplified platform that they can understand. We've also improved the patient experience to the point where our Net Promoter Scores are significantly higher, yield rates are higher and patients are more satisfied."

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