Payments Playbook to Improve the Patient Financial Experience.

In many ways, patient financial management has moved from the back office (coders and billers) to the front office (receptionists and registrars). Leaders are intently assessing the crucial role played by financial relationships in improving the patient experience and creating 360-degree engagement. The clinical encounter is central, but the total experience is greatly shaped by what happens in surrounding administrative interactions.

This report shines a light on payments, one of the dominant components of the patient journey. It evaluates the current payments context driving urgency for change, spotlights many of the leading pain points along the patient financial pathway, and offers leaders a three-step playbook with a checklist for implementing a versatile payments strategy that works to enhance, not detract from, the patient financial experience.
 

Step 1: Understand context creating urgency for change

Patient financial experience has elevated to a C-suite priority through a confluence of visible and powerful factors lending intensity to the issues.
 

Rising consumerism and competition

It has been well documented that patients increasingly want more convenient, personalized healthcare. They are looking to health systems, hospitals and physician practices to offer choice and make greater use of popular consumer technologies.

The trend is fueled in large measure by growing patient financial obligation. Many individuals across the spectrum of insurance coverage find paying for healthcare challenging (Figure 1)¹. 

 

Additional data points show why affordability is top of mind:

• 41% of consumers cite out-of-pocket costs as their most important healthcare issue.²
• 31% of employees are enrolled in High Deductible Health Plans that impose a single-person deductible of at least $2,000.³
• 10% annual growth in patient spending is forecasted through 2028.⁴

At the same time, consumers can obtain care from an expanding array of new providers. These competitors are often skilled at using technology and retail techniques to deliver positive and convenient experiences. Despite setbacks for some of these “disruptors,” traditional providers clearly face greater pressure to get the patient financial experience right.
 

Need for revenue growth and diversification

Health systems have substantially recovered revenue lost during the pandemic. However, driving top-line growth remains an imperative for long-term financial health. Almost half of surveyed healthcare executives view growth as their top challenge.⁵ Growth paths include:

• Outpatient services. Outpatient care volume is projected to increase 16% between 2023 and 2033, and ambulatory surgeries will rise 18%.⁶
• Telehealth. Virtual encounters should grow 28% over the next decade.⁷
• Home care. The Hospital-at-Home model continues to see health system expansion.

Diversified revenue growth is directly linked to attracting and retaining patients and building a brand reputation. Cultivating long-term relationships with consumers through positive experiences is the durable path to success. An important vehicle is streamlined, consistent patient financial management that optimizes resource allocation to reduce cost and devote maximum attention to the patient.
 

Step 2: Analyze the entire patient payments journey

Isolating opportunities to improve payment processes requires thorough analysis that holistically examines patient paths from pre- to post-care. Figure 2 indicates that this spectrum involves many payment-related touchpoints. The chief milestones to assess include registration, patient financial counseling, lending, claims submission, receipt and reconciliation, billing, and refund management. Each step carries potential for positive or negative impact on patient engagement. 

 

Figure 2

A holistic process view goes deep as well as wide. Each major step is composed of many sub-steps. Figure 3 lists several, just for pre-service verification and discovery. Close analysis can uncover pain points. Following are prominent issues that often occur, broken down by stage.
 

Pre-service stage

• Prior authorization. During scheduling and registration, important information is gathered, identity and insurance verified and prior authorization (PA) sought from payers in most cases. The latter has become particularly problematic for providers and patients. One survey found that 15% of hospital and post-acute private insurance claims are initially denied, and 3.2% of all denied claims included ones with prior approval.⁸ Among 1,000 primary and specialist physicians canvassed by the American Medical Association, 27% reported that prior authorization requests were often or always denied.⁹ The physicians emphasize that the repercussions include patients abandoning care (Figure 4).¹⁰ The process also has a negative impact on productivity: 89% of medical groups describe PA as very or extremely burdensome.¹¹

• Estimation of patient obligation. Studies have consistently shown robust patient interest in knowing costs prior to service. A 2019 survey revealed problems with the satisfaction levels of price transparency and estimates, and the more negative skew toward younger patients is a cautionary sign for the future (Figure 5).¹² Unfortunately, health systems, hospitals and physician practices differ significantly in their ability to offer consistent estimates. Smaller organizations tend to struggle with availability of staff and technology to generate estimates.

Figure 5 

 

• Pre-service patient financing. The desire to extend financing to the patient prior to care is great. However, it’s challenging for many hospitals and physician practices that lack the financial resources and risk management skills to offer such options.
• Charity care determination. Uncompensated hospital care has totaled approximately $40 billion annually for many years, so ascertaining those likely to require charity care is important for the institution as well as for the patient.¹³
   

Point-of-service stage

• Day-of-care collection. Some providers don’t collect any payments at check-in, while others do so inconsistently. Additionally, many restrict payment options. This patchwork of approaches frequently creates inconsistent and underperforming point-of-service collections.
   

Post-service stage

• Insurance processing. Claims submission, denials management, payments receipt, and reconciliation are initiated at the conclusion of care. These workflows, shown in the above Figure 2 underneath the central line, are usually invisible to the patient, yet problems incurred in these steps can have significant ramifications for individual satisfaction. Remittance management frequently involves manual, paper-based processes executed across multiple departments using multiple, non-integrated data systems. Posting and reconciliation inefficiencies are common and can delay or confuse patient billing.
• Post-service patient financing. Providers are finding the need to offer an expanding range of financing options to meet divergent patient scenarios. This objective places organizations in the challenging position of acting like banks, with highly variable results. Moreover, CommerceHealthcare^® has written extensively about the heavily manual nature of many in-house financing processes. Delays, inconsistencies and other frustrations can negatively impact the patient experience.
• Refund management. Greater pre-service collections and other factors have contributed to a rise in patient refunds, which have been estimated to total over $3 billion annually.¹⁴ A source of frustration for many patients is that paper checks are still a dominant mode of refund payments.
   

Complexity of analysis

Leaders often encounter difficulty performing a holistic analysis of the patient financial journey due to several factors.

• Tightly coupled processes. Interdependent steps and feedback loops complicate efforts to determine problem causation and resolution. Innovative, “non-linear” thinking may be needed to effect proper change.
• Change of orientation required. Historically, providers have mainly had to concentrate on insurance payments. With patient financial responsibility a more substantial factor, meeting the demands of individuals has become paramount.
• Silos. Departmental, system and workflow silos frequently pose barriers to efficient and customer-friendly transactions.
   

Step 3: Implement a cross-journey strategy and program portfolio

What does building a holistic payments strategy entail? Its foundation unites technology, programs and services in a coordinated, flexible, end-to-end solution. Core strategy requirements include:

• Integration of payment automation solutions with EHR/ERP systems, which typically function as the central patient engagement platform. The payments solution should extend the functionality and enhance the value of these substantial existing investments.
• Seamless fit with current workflows. Independent apps or “bolt-on” solutions often fail to complement processes in place, sapping productivity.
• Comprehensive yet modular. The right payments strategy addresses the whole patient experience, yet can be implemented comfortably for independent steps when needed. That flexibility permits alignment with each provider’s preferred pace of change.

With this strategy in place, CommerceHealthcare^® recommends a six-point checklist designed to create the optimal set of programs, services and support (Figure 6).

Place extra emphasis on pre-service payment touchpoints

Organizations are devoting more attention to pre-service to launch patients along a positive journey. Regarding payments, consumers most want to have their options explained clearly. Healthcare providers are responding in various ways. Some inform patients upfront about outpatient or virtual care alternatives that may be less expensive. Pre-service cost estimates are being offered more frequently, creating a foundation for another major benefit: pre-service financing to give patients certainty about paying for their care.

Technology developments are enhancing analysis of propensity to pay, qualification for charity care programs and other financial variables to help institutions make financially sound decisions tailored to individual patient needs. Advances in artificial intelligence and data analytics promise that such tools will only gain refinement.
 

Maximize patient financing flexibility

Whether offered pre- or post-service, highly flexible patient financing is a critical success factor. A program committed to offering the following features can rapidly satisfy the widest range of patient needs:

• Open lines of credit extended at 0% APR or low variable rates without credit check or update to credit history. Open credit lines can be superior to traditional loans in that the lines can be adjusted easily if care costs vary from initial estimates and can cover expenses from any additional procedures performed.
• Longer duration. Rising costs and increased patient obligation are generating need for payment plans of longer duration than usually offered by providers. Teaming with a well-resourced bank can significantly expand options to allow longer terms with manageable monthly payments. CommerceHealthcare^® generally counsels clients to strive to keep most payments under $200/month.
• Recourse and non-recourse financing. Non-recourse plans, frequently favored by healthcare providers, carry limitations on patient qualifications for loans. Recourse programs widen the pool of patients eligible to receive long-term, no-interest packages. Look for plans that feature fee protections for providers and multiple convenient ways for patients to enroll.
• Process automation. Automating significant steps in application, verification, processing, and servicing is critical. The resulting speed-to-complete is a major boost to patient satisfaction, accelerates cash flows and reduces cost.
   

Expand patient payment options

Providers want to collect patient payments early and quickly. For their part, patients increasingly expect the same level of choice as they experience in consumer transactions. These needs can be satisfied by offering a complete range of secure, convenient payment options, including check, credit card, ACH and mobile phone methods (wallet, text to pay). Over 15% of consumers have used a mobile wallet to pay for healthcare services, according to one analysis, which urged providers to consider the technology a priority “to get ahead of the digital curve.”¹⁵ Merchant banking services can help manage frictionless point-of-sale payments as well.
 

Automate remittance processing

As noted, pain points abound in insurance payments processing. Automation of remittance management is still not as ubiquitous as it should be. Frequent delays, inefficiencies and errors remain a source of frustration for patients and staff. Fortunately, considerable opportunity exists in this area.

The heart of the solution is adoption of technology possessing these high-productivity, high-accuracy elements:

• Single-system management of all insurance remittance types including checks, paper EOBs, ERAs/EFTs.
• Bidirectional data integration with patient financial management systems.
• Software that automates disaggregation of remittances, posting each payment to the correct financial system, and reconciling the payments.
• Reporting and audit trails, allowing management to sustain productivity gains, track KPIs and identify analytics-based improvements.

The upshot is paperless, exception-based workflows that reduce “cost to collect” and produce fast, repeatable execution to foster positive patient payment experiences.
 

Streamline patient refund management

The right payments strategy also alleviates frustrations associated with patient refunds. First, refunds are system-generated using stored patient information rather than requiring manual collection of data. Second, patients can be paid by check, direct deposit, direct-to-debit card, or other options. Faster, more convenient refunds are a clear satisfaction multiplier for patients.
 

Bolster infrastructure to build a scalable approach

Providers face multiple constraints as they seek to meet patient experience and market competition objectives. To respond to these challenges, healthcare providers can bolster their payments infrastructure to build a scalable approach.

For example, an experienced healthcare bank can be a vital collaborator on many fronts. Capital and lending prowess can enable flexible patient financing strategies featuring open lines of credit and other tools. As mentioned, reliable merchant banking services can support point-of-sale convenience. Technology and services are available that help automate remittance and reconciliation. Finally, healthcare bankers can play an important advisory role, helping the client adapt to healthcare’s dynamic strategic imperatives.
 

Creating a better patient financial experience

An important component of creating a better patient financial experience is effective communication at all stages of the journey. Maintaining a clear and consistent dialogue with patients about the payments process builds trust and represents a form of empathy for the individual. Providers should also convey the information through the panoply of digital communications as well as traditional face-to-face discussion.

One CommerceHealthcare^® client fully scripts its front- and back-end patient financial communications. The pre-service estimate discussion sets the payment expectation and describes options and procedures. Ongoing point-of-service and post-service communications keep the patient informed of changes, creating a better patient financial experience.

The benefits of executing the playbook set out in this report are clear and meaningful. Patients gain greater access to care, peace of mind through affordable payment options, understanding via steady communications from the provider, and a more personalized healthcare experience. Health systems, hospitals and physician practices achieve a comprehensive payments solution, not a set of limited expedient fixes. This strategic approach boosts productivity, reduces costs, and adds substantial flexibility to patient financial management. It is an approach that delivers not only return on investment, but also what could be termed a valuable “return on experience.”
 

Conclusion

The payments process plays a vital role in the patient financial experience. The trends fueling concentration on patient engagement and overall experience make the time ripe to adopt a holistic payments strategy. The technology, services and support from an experienced bank are available now to help all providers take a giant leap forward. 

TO LEARN MORE

Offering an experienced perspective on receivables, payments and lending, CommerceHealthcare^® delivers innovative financial solutions to meet the unique needs of healthcare organizations and their patients. Our team of specialists takes time to understand your processes, then recommends tailored strategies for optimizing revenue, improving cash flow and creating better patient experiences. Our high-touch services and growing suite of solutions solve challenges across the payments continuum while streamlining receivables management and offering patient financing options. As trusted advisors, we are committed to seeing your organization thrive by helping you navigate today’s complex financial environment. Learn more at www.commercehealthcare.com.

CommerceHealthcare^® solutions are provided by Commerce Bank.

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