Why provider viability may depend on offering payment options
I read with utter fascination several articles on how technology is being harnessed to advance healthcare in a special Wall Street Journal report on health. Every item covered in the report is not sitting someplace off in the future – it’s very much happening now.
Some of the reporting reflected on how our society communicates, such as the rise of mobile-centric telemedicine or how doctors use text messaging to send tips on avoiding a heart attack. Other advances were more compelling, such as the use of virtual reality technology to engage and encourage stroke victims with their recovery.
Another story looked at the growing use of surgical robotics, which had the feel of science fiction yet is very much fact today. The report also addressed how technology can be used positively to reach large populations to impact their health, develop engineered blood vessels or do neuromodulation that can help with the effects of Crohn’s Disease.
There was even an insightful article on the evolution of healthcare information exchanges (HIE), systems that enable patients’ personal information to move with them—securely and electronically—as they go from one treatment site to another.
The same week that assessment on the state of health-related technology came out, TransUnion Healthcare issued a report showing deductibles and out-of-pocket costs both increased by 13 percent from 2014 to 2015. It noted the average deductible in 2015 hit $1,278, and the average out-of-pocket cost was up to $3,470.
The report is further evidence that there’s been an enormous shift in the financial responsibility for healthcare bills from insurers to patients. TransUnion Healthcare also notes 51 percent of Americans owed at least $1,000 in medical bills in the first quarter of 2016; 77 percent owed at least $500 in the same quarter.
We are seeing the rapid emergence of another payer that medical groups, ambulatory services and hospitals must deal with—the patient. Unlike insurance companies and even Medicare, the patient is not easy to manage and less able to consistently pay, compared with insurers.
Providers have automated systems designed to conform to the claims-processing requirements of insurers. Until recently, as much as 90 percent of providers’ revenue came from those processing the claims. Now, that’s changed.
Michael Trilli, an analyst with research firm Aite Group, suggests providers are seeing the previous ratio of 90-10 percent provider-patient payment split move to a ratio of 70-30 percent. It’s clear that the notion of a fully shared financial responsibility is not far off.
I find it disquieting that nowhere in WSJ’s extensive reporting was there anything about how technology can help deal with this real challenge for healthcare. While I applaud its recognition of advancements on the clinical side of the business, it reflects the industry’s lack of focus on the need to operate like a savvy, 21st century business.
The TransUnion Health report also notes that while patient financial responsibility continues to rise, consumers have less available credit to make their healthcare payments. Providers must act now to address this issue or end up like far too many consumers with unpaid bills, which lead to bankruptcy or some other form of financial distress.
Let’s recognize that the system used to process claims with insurers was deployed out of necessity. Everything was done to satisfy and comply with them, but now there is a new payer—and no proficient process to bill and collect.
Healthcare can effectively contend with the real threat of slow or no pay from its new payer group by coming to terms with its absurd posture on paper bills. U.S. consumer healthcare out-of-pocket payments are expected to exceed $608 billion by 2019, according to Kalorama Information. Yet the healthcare sector continues to overwhelmingly underutilize electronic methods with patient payments and those insurance companies that still ask for paper claims.
Like the innovative technologies reported by WSJ, methods for automated and reliable patient collections are here today, reducing account receivables and improving cash flow for the few enlightened entities in healthcare.
Paperless patient payment solutions not only yield benefits to the billers, but the patients as payers will respond favorably. Several studies suggest that as many as 90 percent of healthcare consumers prefer to get their bills electronically. Deloitte’s research on this matter tallied one of the lowest preference levels—only seven out of 10 survey respondents want an electronic bill instead of a paper one. It’s the way consumers pay their other bills and go about their lives. For healthcare is to effectively engage with this new and important payer group, it must adapt to that paperless reality.
Not embracing change on the business side of healthcare will only serve to make providers less healthy financially and less sustainable for the communities they serve.