With a surging unemployment rate and the economy entrenched in another recession, hospital leaders need to consider flexible patient financing options.
Three patient financing and engagement experts explained how consumer payment behavior changes amid a recession during a May 7 webinar, sponsored by VisitPay and hosted by Becker's Hospital Review. Those experts also offered tips on implementing a patient payment solution that can protect a hospital's bottom line as it navigates the COVID-19 pandemic.
The webinar speakers were:
- Kent Ivanoff, CEO and co-founder of VisitPay
- Vincent Martino, chief product officer and co-founder of VisitPay
- Will Reilly, vice president of client and consumer marketing for VisitPay
How consumer behavior changes amid a recession
Mr. Ivanoff, who worked as executive vice president in the U.S. Card Division of Capital One Financial during the 2008 Great Recession, shared four key lessons learned that may help the healthcare industry prepare for what's to come.
1. Payment hierarchy. Typically, consumers pay their mortgage, then car payments and then credit card debt. However, during the 2008 recession, credit card payments moved up in the hierarchy. While healthcare bills are not likely to move up in the payment hierarchy, it demonstrates to health system leaders that more flexible payment options, like credit cards offer, will make it more likely for consumers to pay off their bill.
2. Payment delinquency rates. Credit card delinquency rates lasted more than twice as long as the stock market contraction in 2008, Mr. Ivanoff said. This shows that consumers felt the financial hit longer than those who invested in the stock market. As a result, health systems should plan on a protracted period of reduced payment rates, with far fewer patients paying their balance in full.
3. Insurance coverage. During the 2008 recession, unemployment and the rate of uninsured individuals didn't peak until October 2009. With the ACA now in place, Mr. Ivanoff said he expects a "softer landing" in terms of people losing their insurance coverage amid the COVID-19 economic downturn. However, while more people have health insurance, they also are more likely to have high deductible plans. Mr. Ivanoff said that healthcare systems should be aware that these high deductible health plans are likely to persist.
4. Macro-economic recovery time. With the 2008 Great Recession, the stock market began to rebound in March 2009; however, the unemployment rate didn't peak until October 2009, Mr. Ivanoff said. This reveals that consumers felt the effects of the recession for much longer than the markets. The depth of the COVID-19 pandemic impact is more acute, with twice the unemployment rate as the 2008 recession in about a quarter of the time. This indicates that consumer payment rates could suffer well into 2021.
"The recession is real … and we are all going to have to contend with it for a much longer period of time," Mr. Ivanoff said.
Five-point plan: Sustaining revenue and supporting patients
Amid economic uncertainty, it is important that patients feel that they have flexibility and tailored options for paying their bills.
"One thing that becomes increasingly clear in a recession is that a one-size-fits-all approach cannot work," Mr. Ivanoff said.
VisitPay offered five steps that will help hospitals support patients experiencing different financial and clinical situations and collect much-needed revenue:
1. Maximize self-servicing. When patients have self-service payment options available to them, it not only empowers them to make payments toward their bills, but it can also cut down the burden on staff in the billing department or call center.
2. Communicate the message on payment options purposefully. The message should be communicated purposefully depending on the patient's financial and medical position, Mr. Martino explained. This means showing empathy for those who need help and sending timely reminders to those who are able to pay.
3. Make precise payment offers digitally. Sending patients payment terms that reflect their current financial situation is one way to ensure patients are able to pay off their bill, whether that is in full or in portions.
4. Target patient payment relief options appropriately. "It is important to tailor and present them with the best [relief] options, instead of confusing them by placing 20 payment plans in front of them," Mr. Martino said.
5. Balance patient satisfaction and payment rate. To get a better understanding of patient satisfaction with the financial experience, health systems should routinely survey patients and conduct performance reports. "When you're offering a strong consumer experience, you're going to engender loyalty, which should then result in greater payments," Mr. Reilly said.
As health systems work to navigate the financial challenges brought by the COVID-19 pandemic, they should consider implementing a patient payment solution that includes flexible, tailored payment plans to boost patient satisfaction and help protect their bottom line.
To listen to the full webinar and learn more about how VisitPay is helping clients with patient financing during the pandemic and subsequent recession, click here.