The health care payments industry is growing at a rapid pace; however, $0.25 to $0.40 of every health care dollar is spent on administrative costs. These costs are only poised to increase as changes due to reform and consumerism continue to reshape the industry, impacting the way many providers do business.
Data from the 2013 Trends in Health Care Payments Annual Report confirms that the health care payments industry is evolving and outlines how providers can manage these changes. In particular, growth in consumer responsibility and the shift in payment methods will be crucial areas to increase focus. The report also details trends and best practices for providers to prepare for the future.
Consumerism is having a major impact on health care payments67% of providers indicated that they saw an increase in patient responsibility. A decade ago, payers and employers managed almost all of the health benefit decisions for patients. As a result, patients were relatively insensitive to costs as they took care of their health care needs. However, today, patients have higher deductibles (over 15.5 million have high-deductible health plans, AHIP) and have become consumers who are sensitive to their healthcare costs.
Collections are also more challenging76% of providers said that it took more than one month to collect from a patient. Trends in health care payments show the increase in consumer responsibility is accelerating, but many providers still rely on paper-based, manual payment collection and posting processes. Furthermore, consumers expect to pay health care bills when and how they choose, as they do for other bills. As a result, providers are spending more money and more time to collect, yet still accumulating a large amount of bad debt.
The web is one option to speed payments79% of patients said that they would prefer to pay online through their provider or health plan website. Consumers want to manage, pay and understand their healthcare bills in one convenient place. To resolve collection issues and meet the needs of healthcare consumers, providers must work with payers to help consumers take control of their healthcare payments. Consumers are also using the web for other payments. More than half, or 55% of patients, said they normally paid their monthly bills online, and 24% said they paid those bills via their banks bill pay portal.
A growing number of consumers now pay household bills using their banks bill pay portal, so they can easily manage all of their bills in one place. By enabling consumers to pay their health care bills this way, providers reach consumers where they are already accustomed to paying other household bills, which improves the ability to collect patient payments and simplifies the health care payments process.
Providers also face inefficiency78%of providers indicated that they typically mailed more than one paper statement to collect a patient payment. In todays health care landscape, providers must operate more efficiently to keep administrative costs low and collect more from consumers. Many industry experts believe that the recent influx of data and analytics due to innovation in health care technology, or Big Data, will give providers the ability to navigate the changes.
Customer knowledge is also a challenge, given that 72% of patients said that they did not know their payment responsibility following a visit. When you stay at a hotel, are you able to check in without giving your payment card? Of course not. However, consumers receive access to health care services with no assurance that they will pay their portion of the bill on time, or at all. Providers have opportunities to use Big Data and technology to accurately estimate responsibility and automatically collect payments, which creates a level of payment assurance already achieved in consumer-focused industries.
Given the trends, providers are turning to online payments76% of providers said that they offered the option of payment plans to their patients. As providers and their clients increasingly rely on consumer payments for revenue, many have started to use more consumer-centered strategies, like payment plans, to collect payments. However, they will have to implement best practices and policies, including automating payments and communications, and ensuring payment data is secure, to improve collection processes.
Bill Marvin is president and CEO of InstaMed, a health care payments network.