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Trends in Healthcare Payments: Opportunities Are Endless for Providers

Chris Seib is the chief technology officer and co-founder of InstaMed, a healthcare payment network used by payers, providers, and consumers. Before founding InstaMed, he was an executive in Accenture's Health and Life Sciences practice. He been involved in strategic development efforts regarding government health initiatives, consumer-directed health plans, and direct connectivity between providers and payers. He is a named inventor of multiple patents and patent applications held by InstaMed.
When it comes to patient collections, trends in healthcare payments tell us that providers are struggling. Though patients owe more for services, providers still rely on the same collection methods from decades ago–print and mail statements. The appetite among patients for these outdated tools is becoming less and less, and it shows in how effectively providers are collecting payments form their patients. Providers have the opportunity to leverage industry trends to empower patients with new payment tools and options for a better payments experience.

In a recent report, 67% of providers said that their primary revenue cycle concern is patient receivables (Provider Healthcare Payments Survey 2018).

One surprising trend coming out of 2018 is just how many providers are still concerned about patient collections, despite payment responsibility steadily increasing for the better part of a decade:
  • In 2018, 85% of covered workers have a deductible, up from 59% in 2008 (Kaiser Family Foundation).
  • The average deductible was $1573 in 2018, up from $735 in 2008 (Kaiser Family Foundation)
Perhaps providers thought, like so many did, that deductibles would reduce how often a patient used their services and their payment collections would not increase. That turned out to be false:
  • Between 2013 and 2017, healthcare utilization declined only 0.2%, while medical costs increased 17% (Healthcare Cost Institute)
Whatever the reason for why providers are still concerned about patient collections, the truth remains that providers are using outdated practices to connect with patients for their bills. Ninety percent of providers leverage paper and manual processes for collections (Provider Healthcare Payments Survey 2018)

Providers still heavily rely on paper and manual process for collections with the primary method being paper statements, despite the fact we now live in a digital world:
  • 14.2 billion connected things will be in use in 2019 and will reach 25 billion by 2021 (Gartner)
  • 81% of consumers own a smartphone (Pew Research Center)
  • Consumers look at their phones an average of 52 times a day (Deloitte)
The gap between providers’ outdated collection methods and the digital reality of the consumer experience is causing significant delays in receiving any payment from their patients. The provider payments survey found that 77% of providers wait more than a month to collect any payment

The longer providers wait to receive payments, the harder it is for them to stay in business. This is especially true when patients owe larger balances, which take longer to collect for providers; for instance, 81% of providers cannot collect $1000+ in 30 days

Why consumers wait to pay medical bills

Providers may be quick to conclude that patients are simply avoiding their medical bills. While that may be true for some patients, a survey of consumers found that for most patients, medical bills usually come as a shock:
  • 93% of consumers were surprised by a medical bill  
  • 61% of consumers received a bill for more than expected
  • 50% of consumers received an unexpected bill
  • 24% of consumers had their accounts sent to collections
All these trends converge to reveal a huge gap between providers and patients when it comes to payment collections: 61% of consumers would consider switching providers for a better healthcare payments experience

How can providers bridge that gap with their patients?  

1. Eliminate paper statements – completely

Only 17% of consumers receive their medical bills electronically, while 71% of consumers want to enroll in eStatements from providers (Consumer Healthcare Payments Survey 2018).

There is strong resistance in healthcare to eliminate paper statements, but this flies in the face of what patients want from their payment experience. Patients are used to electronic forms of communications for most of their bills—why should provider statements be any different? Plus, electronic statements are sent via email and text messages, which can significantly speed up the collection process.

2. Make healthcare payments mobile

Payments from a mobile device on the InstaMed Network have increased to 29% of all online payments in 2018—up 65% since 2015.

When patients receive their bill notification via email or text message, they will make their payments on their mobile device as soon as they receive it. As smartphones dominate the consumer experience, providers must consider mobile as part of their collection strategy.

3. Be where patients already are

Most—86%—consumers want to make all of their healthcare payments in one place. The ability to make a payment online is now a standard business practice in most industries and is quickly becoming a growing share of overall payment experiences. Providers that offer online payment portals meet the demand for a convenient experience in the digital age.

4. Automatic payments are guaranteed payments

From 2015-2018, the total number of automatic payments increased 362% or 115% year over year, according to the Trends in Healthcare Payments Ninth Annual Report: 2018.

Automatic payments allow patients to “set-it-and-forget-it” when it comes to medical bills. This is critical for payments that patients can pay but are inconvenient such as weekly counseling or physical therapy appointments.

The number of payment plans increased by 467% from 2015-2018, growing by 78% on average each year (InstaMed Network Data)

Automatic payments in the form of payment plans offer patients the ability to manage larger bills over time, especially for those with high deductibles. Payment plans offer patients convenient options for those large bills while guaranteeing that the payment is received – without any manual intervention or paper needed.

Both payment assurance and patient satisfaction are possible for providers

Where providers could once solely rely on payers for revenue, patient payments are a growing portion of their bottom line and have become a key component of a provider’s financial outlook. The processes to collect patient payments also present threats to provider organizations as paper and manual processes eat up valuable resources that could be spent elsewhere.

To change course, provider organizations need only to focus on an area that already comes naturally – listening to their patients. Trends in healthcare payments clearly delineate that patients want to interact through automated and electronic channels when it comes to their medical bills. If providers continue to ignore these trends, outside competition and shrinking margins will jeopardize the future of many organizations.

 
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