The VisitPay Blog | Building Better Financial Relationships

Not Another Trends Blog: Identifying the Drivers of Tomorrow’s Patient Financial Experience

As we take stock of where we are in transforming the patient financial experience, we can begin to identify the opportunities and challenges we’ll face in 2019.

So, here’s my first prediction: The year-end “trends” hospitals and health system executives will soon find clogging their inboxes are 1) not exactly state secrets and 2) can be accurately described as existential threats to the financial health of every provider organization.

The number of privately-purchased high deductible health plans (HDHPs) will continue to rise, putting pressure on more consumers to meet rising medical billing obligations. Health system margins will continue to tighten as health systems’ revenue composition continues to shift, and bad debt continues to increase. Patients, growing increasingly impatient and frustrated with antiquated medical billing processes, will make good on their threats to find greener, more consumer-friendly pastures.

Health system CFOs don’t need reminders of these threats. They’ve been dealing with them for years.

Staking a Claim in a New Landscape

HDHPs, consumerism and narrowing revenue margins are wreaking havoc on an environment designed to deal with employers, health plans and government, not individuals and families. Rather than reiterate the obvious, let’s turn our attention to the trends that promise to effectively respond to these threats.

1. Meet the New Healthcare Executive.

Patient payments have always been a factor in provider revenue, but until recently their impact on a health system’s bottom line was modest. Today, patient payments can comprise more than 20% of a health system’s revenue. What was once considered a loss leader is now an urgent priority.

Healthcare billing is rapidly transitioning from a primarily business-to-business transaction with payers, to one that includes a consumer element. These consumers have heightened expectations for their transactions thanks to their purchasing experiences in every other aspect of their lives.

In response, we will see the mainstreaming of a new kind of executive—the Chief Experience Officer or Chief Digital Officer—whose sole focus is creating and sustaining a dynamic patient experience. But we’ll also see existing C-Suite roles, like the Chief Marketing Officer, evolve to become more creative in their approach to a more consumer-focused ecosystem. And forward-leaning health systems will use titles like “Patient Friendly Billing” to describe the job roles of key Patient Financial Services team members.

These new C-suite executives, forging new partnerships with the Chief Financial Officer, will find themselves increasingly tasked with creating end-to-end healthcare experiences for the consumer that seamlessly combine both clinical and financial services. They will use analytics and marketing automation tools to orchestrate consumer touch points in a well-thought-through sequence of experiences that present a consistent brand to the consumer, while helping the health system manage the bottom line more effectively.

One of the hard realities is that health system billing is managed very differently than other financial obligations consumers face every day. It’s complicated and confusing, and the balances are often large and unexpected, the bills variable and hard to pin down.

As a result, health system executives must take an inside-out approach to understanding consumers’ ability to pay, propensity to pay and behavioral characteristics. Those factors will help predict how much help a patient needs, how much financial risk exists with the final balance and how to engage with the consumer on their terms. From there providers should add the ability to further segment the population on other relevant factors, such as whether a procedure qualifies as elective or necessary treatment, how to treat a maternity patient versus one coming in for a total hip replacement.

Once all of that data has been analyzed, providers can begin designing programs and offers that make sense for their patient base in a “mass customized” way. The most important thing to remember is that “one size fits all” actually fits no one.

2. New Metrics for a New Financial Experience.

The clinical side of healthcare is anchored by numerous internal and external benchmarks for measuring patient outcomes, clinical efficiencies and adherence to value-based care initiatives. The financial side has none of these, yet that experience matters and can color how patient’s judges the overall healthcare experience.

In a more consumer-focused environment, health systems will need to judge the success of the financial journey it has created for patients. Use focus groups, online panels, social listening and continuous digital feedback to talk to patients about the financial experience, and measure satisfaction with the current billing experience. A simple five-box customer satisfaction survey will get the lay of the land. Or you could find out your financial experience NPS score.

NPS is a metric used by most Fortune 1000 companies to assess customer loyalty and their willingness to recommend a product or service to others. According to Accenture, 44 percent of consumers choose their health care provider based on personal recommendations. For example, the average health system’s Net Promoter Score is +16, dramatically lower than such leading consumer-oriented industries as hotels, bank, retail companies, consumer electronics, and Internet service providers. In 2019 ways of measuring consumer satisfaction that are commonplace in other industries will become more prevalent in healthcare consumer finance, and providers will work to understand how satisfaction with the financial experience impacts and drives broader satisfaction with the health system as a whole.

Once a patient financial experience solution is in place, it’s important to use the right type of data and reporting to measure results. This platform should include a feedback loop that allows healthcare organizations to continually optimize and improve financial and satisfaction outcomes, and tailor the consumer experience accordingly. Failure to include this element in the patient financial interaction platform will result in a sub-optimal experience for both patient and provider.

3. Low-Cost, Third-Party Capital Flourishes.

There was a time when health systems had rock-solid balance sheets, plenty of liquidity and few patients who needed longer-term financing to meet their medical obligations. And they could use their own capital to float those types of payment arrangements.

As a greater percentage of health care costs shifts to patients, more health systems are seeking to minimize days in accounts receivables and improve liquidity metrics through third-party recourse financing programs.

We see health systems that previously would have shunned the notion of using third-party capital to finance longer-term receivables expressing a new openness to the idea. Unfortunately, most traditional, third-party off-balance sheet programs are expensive for providers, complicated, and deleterious to a seamless patient experience. Additionally, these programs, for all of their costs, do not drive measurable improvements in patient payment yield.

However, before a decision is made, health systems need to know if a recourse financing program would be a net benefit for the health system’s bottom line and how capital is deployed. To that end, VisitPay’s analytical capabilities and consumer finance smarts can help health systems capture a clearer view of patient revenue performance across all types of consumer payments and loans.

If recourse financing is an option, our partnership with JPMorgan allows providers to augment the unmatched billing experience created by VisitPay with a fully automated, low-cost financing solution. Providers can offload patient receivables from their balance sheet to one offered by VisitPay and JPMorgan. This is brought to life with transparent financing costs based on the provider’s specific risk profile. The result is reduced days in A/R and improved patient payment rates, in a seamless provider-branded experience for patients.

New Solutions for a New Landscape

To meet the needs of patients, healthcare stakeholders must work together to help consumers take control of their healthcare payments—leveraging technology, engagement, and education.

At VisitPay, we help health systems adopt new payment strategies that prioritize experience over collections through transparent billing, consumer-friendly payment options and an emphasis on patient control.

In a turbulent healthcare environment, health systems can forge a comprehensive approach to medical billing that helps patients understand what they owe and provides the tools they need to make incremental and manageable payments. This not only improves a health system’s yield and cash flow but also positively impacts non-economic metrics, including patient satisfaction and Net Promoter Scores.

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Kent Ivanoff

Kent is a seasoned business leader who has delivered breakthrough results in a multitude of consumer finance and payments businesses. Prior to co-founding VisitPay, Kent was the Executive Vice President, US Card Division for Capital One Financial. Kent lives in Boise, ID with his wife of 25 years and two children.

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