Most consumers want to pay what they owe for the care they need. Unfortunately, today’s healthcare billing system makes patient payments exceedingly convoluted, opaque and stressful.
This is a problem, because patients are now healthcare’s largest payer after Medicare and Medicaid. According to Forbes, patient payments account for 35 percent of provider revenue.
Healthcare remains one of the only major expenditures where long-term, low-interest payment options are the exception to the rule. In a survey of more than 2,700 patients, Porter Research found that 91 percent “regard healthcare as a ‘big ticket’ expense that requires financing or some sort of payment plan of 12 months or more.”
One out of every three respondents to the survey indicated that they would forgo or delay care if a loan program was unavailable to them. A recent Gallup poll found that 29 percent of patients have put off medical care because of costs; of that number, 63 percent said their conditions were serious.
The billing process that exists in healthcare is inconceivable in any other industry. Imagine purchasing a home where the mortgage is due at closing, or visiting a dealership that requires a car’s entire sticker price be paid before it’s driven off the lot. The average person or family doesn’t have the cash on hand to pay those debts immediately and in full.
Health systems need a better way to help patients understand what they owe, and more sustainable choices to pay it off.
More providers are seeking to implement payment technologies, ranging from web portals to interactive voice response platforms. However, the wrong solution—or the right solution poorly integrated—can exacerbate an already precarious situation.
The Patient Mindset
Patients may now be among the largest payers, but they are not payers in the traditional sense of the word. The relationship between commercial or government payers and providers is built on rules and processes that, if followed, result in reimbursement.
The patient-as-payer doesn’t have that foundation. For a commercial health plan, a claim is a claim. For the patient-payer, it’s a bill—or several bills—sitting on the kitchen table and a pall of uncertainty as to how it’s going to be paid.
If patients understand what they owe and are given reasonable choices to pay over time, they are more likely to pay their bills. According to a Connance Consumer Survey, 74 percent of patients satisfied with their billing options paid in full, compared with 33 percent who were dissatisfied.
Transparency, Choice and Control
A comprehensive approach to patient payments helps patients understand what they owe and provides the tools they need to make incremental and manageable payments. This not only improves a health system’s yield and cash flow, but also positively impacts non-economic metrics, including patient satisfaction and Net Promoter scores. In addition, the right approach reduces the risk of patients avoiding necessary care simply because they’re worried about cost or how they can pay.
Setting the stage for these outcomes means putting patients in a position to successfully manage their healthcare payments. The essential ingredients include transparency, choice and control:
Transparency. Medical bills are way too confusing and frustrating for the average patient. Bills are static snapshots of highly fluid processes that tell an incomplete story and often create more questions than they answer, such as whether insurance payments, adjustments and co-pays are accurately captured.
There are better alternatives to these traditional tools and processes. Health systems must adopt modern, point-of-service tools that provide patients with clarity on estimated patient liability, and also arm staff with resources to manage upfront payment requirements and tailored financing options. This tool can come in the form of a single platform that enables patient self-servicing and is available at any time from any online device for any account on any billing system maintained by a health system.
Additionally, consumers don’t want one-off bills for single doctor or hospital visits. Rather, it’s far more convenient to present consumers with a statement of all charges for a month, similar to a credit card bill. Ideally, consumers would have the option of unifying all family members under one account to manage any number of people – parents, children, grandparents and other family members.
Choice. Health systems typically offer patients some type of payment plan option, but practices vary widely across systems and provide only limited opportunities for better patient payment outcomes. The reason: Health systems are often severely limited by legacy billing systems that cater to billing payers, but not consumers.
Cutting-edge payment solutions, however, offer health systems the ability to personalize offers to patients, catering to each individual’s financial situation. There is no one-size-fits-all approach when it comes to patient payment obligations.
For example, why would a health system offer someone who can easily pay their bill the same terms as someone who will struggle? Patients with HDHPs need the choice of different time durations to fulfill their financial obligations; 12 months doesn’t always provide adequate time for the millions upon millions of Americans who would struggle to meet even a $400 unexpected expense.
Health systems should be able to deliver these differentiated financial offers to patients in an automated manner, and provide variations around discounts, minimum payment amounts, interest rates (if they chose to assess interest) and interest-free periods.
Control. Patient-initiated payment plans put the power in the patients’ hands, and within the providers policies which drives patient satisfaction up while improving staff efficiency. The technology simplifies the process for patients while enabling providers to set minimum installment amounts and maximum payback terms based on customized rules. It’s the ideal approach to high-dollar, high-risk transactions. Consumers expect to be able to pay bills online. According to an AITE Group survey, nearly 60 percent of Americans pay their bills online. Conventional wisdom says that the key is making payment easy for patients by setting up point-of-service (POS) systems that enable them to use credit cards, debit cards, electronic wallets, and other consumer-oriented payment methods.
New Solutions for a New Landscape
To meet the needs of patients, healthcare stakeholders must work together to help consumers take control of their healthcare payments—leveraging technology, engagement and education.
By adopting new payment strategies that prioritize billing transparency and are robust, consumer-friendly payment options, health systems can help shape this new healthcare consumer—and create as much trust of providers in the financial arena as in the clinical realm.
Mickey Lemon is Vice President of Sales & Business Development for VisitPay, a leader in patient financial engagement. VisitPay will be sponsoring the Patient Financial Health Summit on April 12 at the Becker’s Hospital Review 9th Annual Meeting in Chicago.