Why We Must Improve the Patient Financial Experience
Patients deserve better
When Anna received a CAT scan for the chronic pain she was experiencing, she was naturally more concerned about the results of the scan than the resulting medical bills. After discovering she owed $2,000 out of pocket beyond her insurance adjustment, however, Anna’s focus shifted from getting healthy to worrying about how to cover an expense that wasn’t in the budget. She canceled her monthly parking contract and found a less convenient but more affordable way to get to work, made other budget cutbacks, and began sending small payments when she could in the hope of not being sent to collections.
Anna shared her experience with us while we were doing research for a design and innovation challenge aimed at improving the patient financial experience making medical bills easier to understand. Unfortunately, her story isn’t unique. The CDC reported last year that 40% of Americans are enrolled in high deductible health plans (doubling what it was just seven years ago). The biggest consequence of this rise is that patient liability will also continue to increase. With three out of four Americans living paycheck-to-paycheck, most families in our country are one health crisis away from filing bankruptcy. And when the diagnosis of a serious medical condition is compounded by the stress of figuring out how to pay for treatment, it brings the health of our health system at large into serious question.
A broken system
When the Affordable Care Act was being authored, we couldn’t conceive of an outcome that didn’t impose a tremendous amount of financial pressure on patients that had never existed in healthcare before. As many people turned to crowdfunding sites like GoFundMe to plead for help with their medical bills, it became increasingly evident that the economics simply didn’t work. Observing this broken system made us realize that patients deserve a better and fundamentally different way to engage with their healthcare providers. This discovery was the impetus for getting involved in healthcare billing.
Something had to change.
When VisitPay first started, we spent three years working closely with several health systems, and talking to their patients, to hear their stories and identify and evaluate pain points on both sides. While visiting patients in their homes, we saw people swimming in piles of medical billing paperwork. We witnessed Excel spreadsheets being used to deal with the bills received for a single procedure. We saw people creating complex filing systems for storing piles of healthcare paperwork.
We also saw that people had an overwhelming desire to pay their medical bills, and were frustrated and embarrassed to talk to collections departments when their bills couldn’t be paid on time. These are people that should have been focused on getting better, but instead, they were wasting time managing paper trails.
Leading cause of collections calls
According to a study conducted by the Federal Consumer Financial Protection Bureau between December 2014 and March 2015, past due medical bills are among the most frequently cited consumer debts. Other debts include credit cards and student loans. With the majority of Americans living paycheck-to-paycheck, many are forced to make the hard decision of choosing between paying their medical bills or their mortgage or other essential living expenses. These are hardworking people. They’re our neighbors, coworkers and friends. And they need a better way to reconcile their medical expenses.
To make matters worse, high deductible health plans are here to stay, and we don’t see a situation where patients won’t continue to face an increase in their responsibility. As patient financial responsibility and healthcare costs continue to rise, this isn’t only a problem for patients; healthcare providers face the challenges of improving patient satisfaction and increasing patient payments (or risk watching profit margins disappear).
Technology to the rescue
Drawing from our experience working in consumer finance and later in revenue cycle management for a large health system, we believe that technology can be implemented to help solve these problems using this simple truth as a driver: “Bills that are easier to pay—get paid.”
Over our years of research and working with leading healthcare organizations, we realized there are two reasons patients don’t pay their bills: One, they don’t understand what they owe and why they owe it. As an industry, we bombard patients with explanation of benefits (EOB) and bills that don’t make a lot of intuitive sense. We knew that applying best practices from the consumer finance industry could solve that problem. The second reason patients don’t pay their bills is because they need an option to pay over time. Many patients can’t afford to make a lump sum payment.
A successful healthcare financing platform for patients is one that can remove both of these barriers to payment.
A simple, tailored solution
Patients deserve a solution that allows them to be able to understand their bill, see their EOB beside their provider bill, and talk with the health system if something looks amiss—ultimately placing them in the driver’s seat to be able to pay over time in a tailored self-service way. Patients should be given more transparency (the ability to understand their bill) as well as options for making customized payment plans according to their income. It’s not a collections game, but an underlying way of allowing self-service for patients to pay. If you give people options and you fix their transparency so they know what they’re paying, they’re more willing to pay.
Net effect: Good for all
As patient responsibility continues to rise, providing a better, more transparent billing experience is good for more than just patients like Anna—it’s imperative for the success of healthcare networks. By improving healthcare billing, the net effect is that patients are far more satisfied, they’re engaged, and you’ve cemented that relationship with the provider. Patients deserve better, and improving the patient financial experience has the power to increase yield and drive sustainable economic outcomes for healthcare providers.