Deirdre Ruttle is Chief Marketing Officer, InstaMed and Head of Payments Healthcare Marketing, J.P. Morgan

Deirdre Ruttle

The most startling yet persistent trend in healthcare payments over the years is the disconnect between consumer expectations and payment realities. Recent data gives insight into why providers have not prioritized payments as many do not consider payments in the overall patient experience.

However, their patients are indeed making that connection. More than half of patients would consider switching providers for a better healthcare payments experience, including having the ability to understand costs upfront and make payments how they want.

The most recent trends found that consumers increasingly want to manage their healthcare payments with digital and contactless channels, especially during the pandemic. The payment trends for smaller provider organizations offer a glimpse into the possibilities for contactless channels.

Regardless of an organization’s size, the financial consequences of the ongoing COVID-19 pandemic for providers will be difficult to overcome without streamlined and effective approaches to healthcare payments. Contactless payments and communication channels are the paths forward for providers to rebuild.

Startling disconnect between providers and patients

There is a troubling disconnect between consumer expectations and payment realities in healthcare. Year after year, the trends in healthcare payments show what consumers want is not matched by their actual healthcare payment experiences.

However, nearly half of providers did not see the connections between collection efforts and the patient experience. This persistent oversight puts patient loyalty and satisfaction at risk for provider organizations.

Legacy processes dependent on staff intervention and paper statements continue to dominate the industry. In particular, 66% of consumers receive their medical bills in the mail, yet only 14% want to return the payment through the mail. Additionally, 86% of consumers pay household bills online, but 58% of providers still rely on manual and paper collections.

Consumers are responsible for the cost of provider visits more frequently and for higher amounts than in the past. This trend in payment responsibility stands to further bind consumer loyalty to the payment experience in healthcare, especially as consumers engage with providers for medical bills more often. For providers, the increase in payment interactions can ultimately be an opportunity to avoid customer attrition and increase revenue.

Smaller provider organizations benefited from a digital focus

Smaller organizations may have been better positioned for the financial challenges presented by the pandemic with contactless payment channels in place before the start of the pandemic. The trends in healthcare payments show that organizations with 15 or fewer physicians actually had an increase in online payments, up 55% in 2020, coupled with a 64% increase in plan volume in 2020.

Online payments enable organizations to increase collections with minimal staff involvement and fewer resources, such as paper statements. The efficiency of contactless payments may have attracted smaller organizations that needed to increase cash flow without additional costs, even amid a pandemic.

The pandemic drove many providers to adapt their payment strategy to include contactless channels. More than half of providers changed their contactless due to the pandemic. Nearly a quarter of providers adopted contactless payments for patient collections during the pandemic.

Contactless payments that rely on electronic transactions will be key for providers of all sizes to recover from the financial consequences of the COVID-19 pandemic. Electronic transactions offer considerable savings potential to providers as demonstrated by payment-related transactions with payers. From eligibility to claim payments, providers save time and money on each electronic transaction over manual processes. This savings potential will be crucial on their path to a financially healthy post-pandemic reality.

What consumers want in healthcare payments

The pandemic accelerated many trends in healthcare payments beyond the contactless payment options offered by providers. The COVID-19 pandemic also caused an unprecedented surge in digital adoption. In particular, eCommerce saw a significant increase in 2020 according to payment trends: $211.5 billion was spent on eCommerce in the second quarter of 2020 alone, up 31.8% quarter over quarter.

This trend will likely only gain momentum as the convenience and efficiency of eCommerce are realized by more consumers. Almost 7 in 10 consumers worldwide say the shift to digital payments will likely be permanent. In healthcare, the majority of consumers also want digital to remain in the future. This includes online check-in, digital payments and electronic communications.

For over a decade, consumer sentiment has shown an increasing preference for contactless and digital options in healthcare payments. An important component of digital channels in healthcare payments is electronic payment methods, instead of paper checks and cash that require manual posting and processing. More than 80% of consumers prefer electronic methods for healthcare payments.

The reality of provider processes: Paper persists

Outside of the COVID-19 pandemic, provider organizations have not kept pace with the digital growth experienced in other industries. Throughout the healthcare industry, paper and manual processes still dominate provider processes related to patient check-in and collections:

72% of providers use paper and manual processes for check-in

81% of providers use paper and manual processes for collections

76% of providers use paper and manual notifications for collections

The current processes providers use for patient collections require valuable resources. However, that investment does not guarantee that a payment is received. Many providers report that a balance can take more than a month to collect, including larger balances. Even after a balance is collected, there is no guarantee that the amount owed is the same as the amount paid. Nearly all providers report issuing patient refunds.

To rebuild in a post-pandemic future, the benefits of contactless channels will be crucial to cut costs, promote efficiency and improve collections. The path to contactless interactions must begin with electronic payments. While many providers accept electronic payments, this payment type does not fully dominate patient collections. Providers will need to actively promote electronic options over cash and paper checks to fully eliminate the drag of paper and manual payments.

Electronic payments allow providers to securely save consumer payment cards on file. Providers should not fear patient pushback on this as 83% of consumers already save their cards on file or would in the future. Many providers, however, report that they do not support saving cards on file. For providers that do, the number of cards saved on file increased 206% or an average growth of 45% year over year, according to data from the InstaMed Network.

Trends in healthcare payments in action: Consumers overwhelmingly adopt contactless

The trends in healthcare payments tell us consumers want contactless options from providers. When providers make that available, patients can quickly adopt those options. In this example, a pediatric surgical practice increased collections by 250% during the worst of the pandemic.

Previously, the practice offered families access to an online portal to communicate with providers, view test results, and manage appointments. However, the clinical portal did not allow patients to make payments. Patients had to use a separate billing portal to pay online.

Moreover, setting up an account on the billing portal was so complex it required staff intervention. Instead of reducing workload, the system created more work for staff. Families calling to set up a payment account on the portal often ended up paying the bill with a credit card, rather than going through the longer and more process of setting up an online account.

Working with its billing service, the practice implemented a quick-pay option for online payments at the beginning of 2020. The new payment channel gave families a simple, self-service option to pay online without the hassle of accessing a separate payment portal or adding to staff workloads.

The practice promoted the new payment channel by including the URL on all billing communications, such as statements and pre-collection letters. Additionally, every staff member who fields a patient call encourages family members to pay their balance online rather than make a payment over the phone.

When billing staff had to work remotely beginning in March 2020, the payment portal helped support the transition. Rather than being forced to take credit card information over an unsecured phone line, staff directed patient families to the new, secure online payment site. Families were able to continue making payments via the channel with minimal staff intervention. In fact, the system was so successful that April 2020 saw the highest level of patient payments in the company’s history.

Contactless payments and experiences are key for provider organizations

Payment trends in smaller provider organizations offer hope for what can be accomplished with contactless payment channels. This segment of providers saw payment growth in self-service and automated channels, even during a pandemic when non-essential services were closed. The trends indicate that the clearest path forward for all providers will be paved with digital, contactless payment and communication channels, which can improve the patient experience and ultimately help providers collect more from patients at lower costs.

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