What is the economic impact of COVID-19 on the healthcare industry? With elective procedures halted and millions of workers left unemployed and furloughed, health providers are seeing rapid financial fallout. A recent survey revealed that 37% of people say they would consider putting off treatment for COVID-19 to avoid medical bills. It’s clear that the road to recovery is a long one—but it’s not an impossible one.
“The key truth for providers is the need to focus on the patient financial experience from beginning to end, with transparency and ease of access to guide patients through the billing process with compassion and tailored payment alternatives that fit their needs,” said Kent Ivanoff, VisitPay Co-Founder and CEO.
That’s why it’s important to look at current trends to better understand the reality of the situation. It’s why we’re looking to the Great Recession of 2008 to glean what we can about how consumer payment behavior changes in a downturn and be better prepared. It’s why we’ve put together a Five-Point Plan as a strategic response to create a financial experience that supports patients while sustaining revenue.
The challenge ahead is a great one, but with the right knowledge, necessary tools, and a clear plan, we can overcome it.
A look at the economic effect on healthcare
Health systems face significant financial challenges
The clinical and economic threats of the COVID-19 crisis are leading to substantial consequences for healthcare providers. We have analyzed data from across our health provider client base, representing over 236 not-for-profit hospitals in 13 states and more than $80B of annual Net Patient Revenue. The financial impact of COVID-19 is consistent across health systems, from market to market. Charges and payments are down across the board, although VisitPay payments buck the trend.
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Learning from the past to prepare for the future
Understanding consumer behavior in times of crises
The Great Recession of 2008 offers a valuable window into the way consumer payment behavior may shift as a result of the COVID-19 crisis. As millions of Americans struggle with this unexpected financial burden, the healthcare industry can prepare itself by looking at the lessons learned from the previous recession.
Payment trends to look for
Debt hierarchy may flip upside-down
One of the biggest shifts seen during the Great Recession was to the consumer payment hierarchy. Historically, mortgages were the first priority in payment, followed by auto loans and then credit cards. During the recession, credit cards vaulted upward in the payment hierarchy. Why? People value flexibility and liquidity when economic times are tough, and credit cards offered this. Health providers can learn from this by introducing more flexible payment terms for patients who need it.
Payment rates will decrease
As people adapt to new financial challenges, healthcare debt is unlikely to be a top priority. The healthcare industry should plan for a period of reduced payment rates with far fewer balances paid in full. These effects can be mitigated by giving patients more flexibility in how they can pay.
Expect a delayed impact
The economic effects of COVID-19 will likely last much longer than the virus itself. While the stock market began its recovery from the Great Recession in March of 2009, unemployment didn’t peak until October of 2009, and the biggest impact on insurance didn’t occur until 2010. Even once the market repaired itself and employment was rising, people still paid their bills with a recessionary mindset for years.
More flexibility means more payments
The likelihood of receiving payment will increase with more flexible payment terms and extended payment times. Tailoring flexible offers to each patient in a fully-automated delivery system will encourage patient self-service.
Payment plans are a win-win
It’s important to get people in the habit of paying their medical bills. Keep them engaged with payment plans that work for them. Smaller, more manageable payments over longer terms will lead to higher payment rates for healthcare providers.
A Five-Part Financial Blueprint
These five strategies aim to assist healthcare providers and their patients amid financial uncertainty.
COVID-19 has created complicated challenges within the patient financial experience. We want to be a resource to help the industry adapt. That’s the purpose of this Five-Point Plan. It’s a blueprint designed to give patients the flexibility they need while keeping them engaged in the financial cycle, ensuring providers sustain revenue.
Three challenges that face the health industry
First, many patients will be struggling to pay medical bills. With many other financial concerns, it’s likely that healthcare debt won’t be their priority. We want to be sure to keep them engaged in the financial process.
Second, we can expect more inbound calls to provider patient financial services teams as patients look for flexibility with their existing bills.
Finally, every patient has different needs. It’s important to support those that require financial relief in a targeted, fair, and precise way.
The Five-Point Plan
- Maximize self-service
- Communicate purposefully
- Make precise offers
- Target relief appropriately
- Balance patient satisfaction and payment rate
The easier it is to pay, the more people will do so. Get as many patients as possible to opt-in to self-service payment, and to make payment arrangements. This will help minimize the impact on your call center staff.
Unfortunately, millions of people have and will lose their jobs in this crisis. Soften and tailor communications across the revenue cycle to show compassion to those in financial distress, while maintaining existing reminder language for patients’ whose ability to pay has not changed.
Make precise offers
Automatically deliver payment terms that reflect the current, possibly radically changed, economic circumstances of each patient.
Target relief appropriately
Direct help where it’s needed most while also alleviating call center strain by providing self-service payment relief options on a targeted basis, gating further support through curated CSR actions.
Balance patient satisfaction and payment rate
Leverage AI-powered learning loops, patient surveys, and regular performance reporting to find and maintain the optimal balance of a positive patient experience and financial performance.