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The Rise of the Retail Experience in Healthcare Patient Payments

patient responsibility perspective

Hospitals and physician groups are facing what is perhaps the greatest recent challenge to their bottom lines—the growing portion of the medical bill that is charged to patients. While in the past healthcare providers have shrinking reimbursements from Medicare and Medicaid, along with increasing downward pressure from commercial payers, they now face an even greater threat to their already slim margins: rise in patient responsibility.

The average family deductible has grown 40 percent since 2010. Meanwhile, the Affordable Care Act (ACA) has created millions of first-time health plan members. The combination of new consumers in the mix – and new plans that require more skin in the game – puts provider organizations on precarious footing when it comes to collecting from patients.

By some estimates, it costs twice as much to collect from patients—and it’s easy to understand why. Patients might need to be re-billed; they may need to talk with staff about billing questions and ways they can pay; they may prefer a payment method that requires more hands-on work or manual reconciliation. These all require time and additional resources on the part of providers.

Those are just a few of the reasons why healthcare organizations must embrace a deeper level of customer service and consumer education to help their patients understand their patient responsibility and appreciate the value of the healthcare services they are receiving. And when it comes to serving their patients – the mission of all healthcare organizations – there’s a natural responsibility to make it as easy as possible for patients to pay what they owe.

After all—who wants to add extra stress?

Begin at the beginning

Providers have the opportunity to engage with patients about the costs and value of care long before those patients receive a bill—and before those patients receive one of those confusing "This is not a bill" statements.

To better educate patients on their new financial responsibilities and their new options, provider organizations must leverage all potential touchpoints with patients to demonstrate the value of care and improve transparency around costs. It can also be helpful to sync patient engagement strategies to different phases of revenue cycle management (RCM). For instance: scheduling, financial counseling, patient care, and collections to ensure thorough understanding of the care and cost of care provided.

By recognizing and seizing opportunities along the patient journey to engage and educate the patient on their financial responsibility, provider organizations can minimize the risk of non-payment. Providers can optimize opportunities to improve cash flow and potentially even engage patients in preventive care that can mitigate their out of pocket costs.

Consumers’ biggest stumbling blocks

For many patients, paying substantial medical bills is something new and unwelcome. There are three key obstacles to paying bills that must be addressed to improve revenue cycle management:

Lack of clarity on what is owed

Healthcare providers must provide timely, accurate and easy-to-read statements so patients know what they owe. But many times, bills are so complex that patients throw up their hands in dismay—and don’t pay.

Imagine if a restaurant tab included a fee for the server, one for the overhead to cover the restaurant lease and then a charge for each ingredient in an entrée—some of which was covered by one or more third-parties.

Providers need to simplify bills and offer support to help consumers better understand what they are responsible for and why.

Lack of convenient payment options

One of the biggest differences between healthcare payments and that of other industries is that nearly all other industries have greater adoption of electronic payment methods. While check payments overall have plummeted since 2010, the number of healthcare bills paid by check has actually risen, along with deductibles and other costs that now make up the patient responsibility portion of the bill. (This may be in part because of health savings accounts—which also offer paper-check and ACH options along with debit cards.)

Even in 2014, more than 60 percent of consumers had already started making online bill payments outside of healthcare. Nine out of 10 consumers, when asked, want to have this option for medical bills. Research from eMarketer has found that more than 10% of consumers will go online exclusively through a mobile device this year—and it’s clear that mobile payments are a key tenet of effective patient payment options going forward.

Lack of financing to make payments affordable

When asked why patients failed to pay medical bills, the largest cohort, 37 percent, said it was because of a lack of financing. Gone are the days when most patient bills were $20, $30 or $50 co-pays. Patients being discharged from the hospital now may face thousands of dollars of expenses after a routine surgery or childbirth, and may even be responsible for the lion’s share of it before meeting their deductible.

Many consumers are unprepared for these sudden bills and will need payment plans to pay off the balance. Payment plans work well for healthcare organizations too: research shows that compliance with auto-pay payment plans for medical bills is nearly 100 percent.

To resolve these issues and meet the needs of healthcare consumers, all healthcare stakeholders must work together to help consumers take control of their healthcare payments – leveraging technology where it makes sense to do so, and proactively engaging and educating patients on the new landscape.

Help patients help you

Provider organizations need a comprehensive approach to the growing volume of patient payments– one that will improve transparency, patient education, convenience, and affordability. The approach needs to offer multiple payment and communications methods to help meet patients’ growing expectation of a personalized consumer experience. This approach should include:

  • Patient-initiated payment plans: enable patients to set up payment plans that increase likelihood of payment and remove friction from the collection team
  • Intelligent statements: don’t just provide a record of what is owed—proactively drive patients to the most crucial information while offering easy-to-read print and electronic statements
  • Secure payment processing: arm your organization against fraud with chip-card technology and end-to-end encryption while offering multiple payment options to ensure convenience to your patients
  • Mobile capabilities: ensure patient satisfaction by allowing patients to pay via mobile device while also viewing statements and current balances
  • Check processing: securely accept checks over the phone, online or through the mail
  • Dynamic reporting: comprehensive reporting, customized based on your unique KPIs

Take the long view (and the short view)

A comprehensive approach to patient payments will help improve cash flow and reduce days in accounts receivable in the short-term. But a new patient-centered approach to payments will also help ensure the provider organization’s financial future. Why? Because a positive customer service experience will yield loyalty in the future, loyalty that could expand to referrals for other potential patients—in short, the payment experience is one of providers’ connections to a high-value, consumer-driven healthcare market.

Positioning the organization to meet the new patient payment challenges can yield financial, administrative, and even clinical improvements—the right approach reduces the risk that patients will “avoid” necessary care simply because they’re worried about what they owe or how they can pay.

Meanwhile, the right online payment options mean patients can manage, pay and understand bills in one place – reducing the burden on staff who previously had to accomplish that work over the phone. As plan information is increasingly viewed through payer portals, there are emerging opportunities to educate patients on deductibles and plan specifics, and minimize unpleasant surprise bills. Finally, engagement across multiple channels and along the patient journey can help providers engage with their patients on preventive medicine and healthy lifestyles education that can minimize their out-of-pocket expenses.

This new era of growing patient payments isn’t easy for providers or patients. But with the right approach, the two can become partners in better care – care that is sustainable not only for consumer wallets, but also for the margins of health systems.

Want to learn more about ZirMed’s Patient Payment software? Request a demo!