How to improve patients’ payment experience, and health, by making it affordable

One thing is certain in today’s consumer focused healthcare environment: When it comes to the payment experience, patients have begun to see themselves as customers. If hospitals and health systems hope to continue earning their business, and to help patients avoid making ill-advised decisions to delay care base on financial concerns, these organizations must deliver a consumer-centric payment experience based on transparency, ease of use and genuine affordability. 

Why healthcare consumerism is a serious business

The view of a patient as a consumer has clear limits. No one puts health at risk by postponing a vacation to Disney World, and no harm will come to someone who decides not to eat at the trendy restaurant due to cost. Yet when healthcare consumers forgo medical tests and treatments, the consequences can be severe:

• Patients who delay care for a condition like asthma can face higher-acuity problems (often in the emergency department) as symptoms are left unchecked. 
• Patients who opt out of a post-operative follow-up visit may develop major complications that could have easily been addressed. 

Such scenarios also can contribute to higher healthcare costs because of the healthcare system’s increased reliance on emergent rather than preventive care. And delayed care means lower patient volume, a growing challenge for many hospitals.

Delays in patients seeking care costs providers and patients

A substantial body of research has documented the correlation between issues of cost and decisions to delay care. Patients avoid care if they don’t know what they may owe or perceive it to be unaffordable, a perception that has increased with rising out-of-pocket costs. Consider that: 

• Costs have kept roughly three in 10 Americans from seeking medical treatment in the past year.1 
• Nearly 30 percent of patient respondents to a 2016-17 survey had problems paying their medical bills.2
• More than half of the survey respondents had put off or postponed care they needed because they couldn’t afford it. 

The trend of delaying care is especially problematic with chronic illnesses, already healthcare’s costliest area. Insufficient management of diabetes, for instance, leads to greater costs downstream and can wreak havoc on a person’s quality of life. When conducted strategically, thoroughly and regularly, however, diabetes management programs have been shown to reduce these costs while producing better health outcomes for enrolled patients and more predictable patient volume (a predictability that itself facilitates more effective care).3 

Instead of building on such successes, however, diabetes management trends are moving in the wrong direction. As the New York Times recently reported, in 2018 one in four patients with diabetes admitted to cutting back on insulin use because of cost.4 As the healthcare system stands today, the focus should be on removing this major obstacle keeping patients from accessing care. 

4 objectives to providing a consumer-centric payment experience

The elements of a positive financial experience for patients should more closely match how families currently pay for higher education: The cost of the experience should be transparent and predictable, and the process of paying for it should be logical and surprise-free, no matter the amount. 

As HFMA’s president and CEO, Joseph J. Fifer says in a 2018 column in hfm: “In health care, customers too often expect their financial experience to be characterized by hassles, confusion and unpleasant surprises. Job one, for our industry, is to turn that around.”5 

An effective starting point, with the stakes so high and the objectives so clear, is to focus on the following four objectives. 

1. Reach patients where they are. In healthcare, commentaries about modern billing and payment expectations tend to focus on electronic options and online account access. But, a recent unpublished study that looked at 500,000 patient payments across multiple hospitals found that, although 70% of the payments are made online or mobile (via credit card or e-check),  30% of patients still pay their bills via paper checks. This finding should not be surprising given the size of the senior patient demographic, for many of whom paying by check is the most comfortable option. Patients of all ages also opt for paper-based payments for reasons of identity security. When hospitals focus 100% on digital payments, they are not meeting the needs of all their patients.   

Payment plan offers should be tailored to each individual patient, with terms and amounts designed to fit with each patient’s ability to pay. Patients also should be able to accept payment plan offers via the channel they prefer and be able to change from one channel to another (e.g., from paper check to credit card) mid-term without a hiccup.  

2. Center payment around the patient. One of the most alienating experiences for a patient is to establish one payment plan, only to receive a separate bill for a follow-up procedure or additional service without any recognition of the existing plan. Hospitals should link separate visits and balances through a single payment experience that is designed to adjust payment plan offers for new services and changes, based on the patient’s ability to pay.  

The same basic logic applies to costs incurred by the patient’s family members, factoring in the household’s ability to pay: Consumer-centric payment plans will automatically roll up any new costs into the guarantor account, whether those services were needed by the patient or the patient’s family. For example, if a  parent had a scheduled elective procedure and opted into a payment plan, and then their child had an emergency procedure the following week, the child’s balance would automatically be rolled into the parent’s existing plan.   

3. View patients as “subscribers,” using financial incentives to drive payment behavior. When it comes to payment plans for healthcare, hospitals should think in terms of service subscriptions, not individual services, keeping in step with the evolution of what the global firm Zuora calls the subscription economy.6 

This approach recognizes hospitals are in an ongoing relationship with patients who pay for services over time. The key differentiator for hospitals from other service subscriptions is that patients for the most part are paying for healthcare services already received, making it a collection effort for the hospitals. Yet a payment plan need not be only retrospective. For patients who want a payment plan to be offered pre-service, hospitals should offer payment plan options up front from an estimated balance, then adjust when the balance becomes self-pay.   

Hospitals also have an opportunity to take a more strategic approach to this relationship using financial incentives, such as prompt pay discounts or monthly installment fees, to influence decisions on how and when patients pay. A recent patient-payment survey, for instance, found that fees for payment plans had a significant influence on a patient’s payment plan decisions:7 

• 33% of patients would choose shorter terms to reduce fees.
• 17% would pay balances in full to avoid fees.
• 25% would avoid plans altogether due to fees.
• 25% say fees have no impact in their choice of payment methods. 

4. Make care more affordable. Patient payment “behavior” is not the only factor to consider here, of course. Even the most well-designed incentives can’t overcome the financial realities of a patient’s inability to pay for care. Hospitals and health systems should be willing to work alongside their patients in the interests of affordability. 

Affordability is not exactly equivalent to cost. There are many investments or services (homes, vehicles, higher education) that an average person could not pay in full, but expects to pay over time. Thus, while the actual total costs still matter, hospitals and health systems can make care more affordable for the patient by offering payment plans that fit a patient’s finances, thereby improving the customer experience.  

The signs and impact of positive customer experience

After implementing such tailored payment plans, hospitals and health systems will want to know whether they’ve succeeded in creating a positive payment experience, and whether that result has helped mitigate factors contributing to delayed care. Four signs point to success:  

• Increased patient volume on the preventive side, indicating patients seeking care more proactively because they see payment as less of a barrier.
• Increased self-activation of payment plan offers, signaling patients’ implicit satisfaction or approval of the offers and validating that the payment process is clear, easy to navigate and manageable.
• Increased return visits by patients to the hospital for further services, with implied acceptance of the roll-up of resulting costs into their existing accounts, demonstrating their increased loyalty tied to high-quality care and a predictable, affordable payment schedule.
• Reduced call volume to call centers, suggesting higher levels of satisfaction (the premise being increased calls to customer service representatives signifies greater levels of dissatisfaction or confusion)  

Conclusion

Understanding the meaning of the healthcare customer’s financial experience has real ramifications for both individual and population health. Affordability affects both patient satisfaction and patient action: If patients feel they cannot afford a visit, procedure or prescription drug, they often will simply forgo it. Hospitals and health systems therefore should understand and tackle the customer experience by addressing all patient concerns from pre-procedure anxiety about payment to the last invoice a patient receives.