The payment landscape is undergoing profound changes as a greater burden of healthcare costs move from insurers to patients.
Healthcare practices are generating more bills for more payers, and they’re having more difficultly collecting those payments in a timely fashion. In fact, the Medical Group Management Association estimates the average provider sends out 155 statements per month and must send THREE statements before a balance is paid in full, at an average cost of $4 to $7 per balance.
To remain financially sound in this increasingly complex environment, healthcare practices need to move to a patient-centered billing system that puts information and payment options in the palm of the consumers’ hands. By making payments easier and asking for them sooner, providers can boost their cash flow and reduce the costs and administrative hassle of chasing after payments.
The Growing Payment Problem
Collections have historically been one of the top concerns for healthcare clinics, and the problem is only growing worse as more costs are shifted to patients. It’s not surprising that more patients are having a harder time paying their bills. The Kaiser Family Foundation reported that the average deductible for employer-sponsored health plans rose to $1,478 in 2016.
Collecting from patients is quite different than seeking reimbursements from insurance companies. Patients don’t have formal processes for making payments, and the larger the bill and the longer it goes unpaid, the less likely it is to be collected in full. Athenahealth analyzed 5.4 million visits by 3.1 patients at 51,000 providers in 2016 and found that collection rates can vary dramatically at price points. While practices collect payments at time of service 40 percent of the time for balances of $35 or less, that number drops to only six percent for balances of $200 or more. And of those bigger balances, only 66 percent were paid within a year.
Old payment methods are no longer effective in this new tech-oriented environment, and they’re weighing down the cash flows and balance sheets of providers. Hospitals and ambulatory practices alike are being burdened with higher administrative costs and hassles due to greater volumes of bills and multiple billing workflows. According to the BlackBook’s 2017 Revenue Cycle Management Report, more than 90 percent of hospitals say traditional collection solutions are negatively impacting profit margins at the cost of millions in unpaid medical bills.
Catering to the Consumer
As patients become the primary payers, providers will need to re-evaluate their billing and collections processes. Antiquated, slow and outdated billing processes only exacerbate the collections problem in our omni-channel world. The old days of snail mailing a bill a month after service and calling to collect payments are ineffective.
Today, patients expect digital payment options and a high level of technologically-enabled customer service. Simply put – they want to pay their medical bills with the same ease that they pay their retail credit cards and their on-demand delivery drivers. In fact, BlackBook’s aforementioned survey found that more than 70 percent of patients say mobile pay and billing alerts improve their experience, citing the billing process as their No. 2 customer satisfaction metric, just behind patient care.
Despite these preferences, most providers are not keeping pace. A recent survey found while 52 percent of patients prefer electronic billing, 89 percent of providers still bill by snail mail. And while nearly 80 percent of patients approve of having a credit card on file, only 20 percent of providers currently offer the service.
Getting Started. Getting Paid.
Healthcare providers can bridge the gap between themselves and patient payers by taking a page from retailers to create a “frictionless” payment experience. A new breed of cloud-based patient billing solutions are helping physician offices do just that. To get started, practice administrators and billing managers should identify a software vendor that allows patients to pay via mobile, desktop and in office, and that integrates with the practice’s EHR. Next, educate patients on the new consumer-friendly payment method, and adoption will follow. Quickly, your practice will see increased collections, efficiencies and patient satisfaction.
Michele Perry is the CEO of Relatient, a leading Software as a Service (SaaS) company focused on optimizing patient engagement. The company recently launched a first-of-its-kind patient billing solution, MDpay. For more than 20 years, Michele has led cloud-based technology companies at the forefront of automation, Big Data and digital transformation.