As hospitals work to enhance the patient experience, many are turning their attention to the patient financial experience.
Our recent research shows 35 percent of consumers are worried about their ability to pay a healthcare bill of $500 or less, and 46 percent are concerned about paying a medical expense of $1,000 or more. In an era of consumerism, when individuals are accustomed to having multiple payment options for big-ticket purchases, patients seek similar flexibility in paying their out-of-pocket medical costs. Increasingly, they are also “shopping” for healthcare providers based on the availability of financing options.
These are just a few reasons why 80 percent of hospitals and health systems are considering outsourcing revenue cycle management this year—including patient payment plans.
How can the move toward outsourced payment plans generate a positive return for hospitals while strengthening the patient financial experience? Four factors stand out.
Greater flexibility for patients. Third-party healthcare payment plan providers typically are in a better position to service no-interest and lower-interest payment options for consumers, which reduce financial stress for patients, increase the odds of collection, and engender patient loyalty. We’ve found that hospitals’ performance around patient payment rises by offering the flexibility for patients to be able to switch to an interest bearing payment plan that comes along with lower monthly payment amounts. This allows them to continue paying down their bill instead of defaulting. But for hospitals, managing payment plans can be difficult for internal staff because they lack experience in doing so. Turning to an experienced vendor enables hospitals to provide the flexibility patients seek while reducing administrative time and expense.
Increased collection rates with lower recourse rates. Data shows up to 97 percent of patients pay their bills in full when they are offered both no-interest and low-interest options for payment. This is much higher than average hospital self-pay collection rates, which fall around 25.5 percent, according to a Crowe Horwath analysis. By using a service provider that uses proprietary predictive analytics, recourse rates can also substantially decrease by determiningwhich patients to fund.. Not only will patients better meet their monthly payments, but health systems will also benefit from lower recourse.
Self-service options for payment. The right third-party healthcare financing provider will provide the tools for patients to self-enroll in payment plans and establish revolving accounts to manage out-of-pocket care costs for themselves as well as their family. The ideal solution leverages an easy-to-use patient portal that allows patients to self-enroll in the desired payment plan, make payments or establish automated payments, view statements, and manage their account. Increased self-service options not only strengthen the patient financial experience, but also increase revenue cycle efficiency. For example, one health system that adopted self-service options for payment plans increased its speed for answering customer service calls by 67 percent.
Competitive advantage. Research shows patients are willing to switch providers to access no- and low-interest financing options, with 46 percent of Millennials, 36 percent of Gen Xers, and 28 percent of Baby Boomers willing to make the move for flexible payment. That’s because flexible payment plans indicate a hospital’s willingness to work with patients in fulfilling their financial responsibility—critical at a time when healthcare out-of-pocket expenses increased 12 percent in one year. As Melissa Williams of Palm Beach Gardens, Florida, said when faced with a required $1,000 deposit before the birth of her daughter, “I was scared a lump-sum payment would leave me with no money in reserve.” When she was given the option to make payments over one year instead, Williams breathed a sigh of relief. “The process was easy,” she said. “I was grateful for the flexibility it provided.”