It is a tough balancing act to improve healthcare affordability in a way that enhances both patients' financial experiences and providers' collections on outstanding patient bills.
But with the right technology and user-centered design, it is an addressable problem.
During a June Becker's Hospital Review webinar sponsored by PayZen, a fintech provider that solves for healthcare affordability, two of the company's leaders — Bill Kramer, vice president of marketing, and Tobias Mezger, co-founder and chief operations officer — discussed how technology that enables customizable payment plans is reinventing the concept of patient financing.
Three key takeaways were:
1. Medical debt has a significant impact on patients and providers. With more than 40 percent of Americans carrying medical debt and 70 percent of those having debt of over $1,000, it is no surprise that as many as 63 percent of people with household income below $40,000 are delaying or foregoing needed care. And those who do take on debt are not necessarily uninsured: members whose health plans impose high deductibles and out-of-pocket maximums may end up owing a balance after receiving care, too.
For providers, this situation is disheartening because collecting on medical debt using traditional patient methods is difficult. According to benchmarking data from Porter Research, PYMNTS.com and Crowe RCA, collection rates on balances are abysmally low:
- Only 15 percent on self-pay after insurance (SPAI) balances overall,
- Only 6 percent on self-pay (uninsured) balances
- And only 4 percent on SPAI balances between $7,501 and $10,000
"It's not because patients don't want to pay. People are willing to pay if only they had an affordable way to do so," Mr. Kramer said. Yet, traditional financing options that come with hidden interest and fees and convert balances into bad debt if left unpaid are not working, either: 63 percent of patients express interest in payment plans that allow them to avoid bad debt, while 92 percent say healthcare is an expense that requires financing of more than 12 months. With most in-house programs topping out at 12 months, it’s not surprising that collections rates are so low.
2. A new approach based on affordability is needed to address these problems. As PayZen set out to design a solution that alleviates the financial burden on patients while improving collection rates for providers, it focused on three core principles:
- Enable affordable payments by offering interest-free monthly plans that match patients' financial profiles and can be spread out over up to 60 months.
- Get patients the care they need by not compelling them to postpone seeing their provider until balances are paid in full.
- Get providers paid what they earned through non-recourse pre-funding on all plans.
"There are no gotchas, no hidden fees, no implementation costs — patients choose their terms, and it's fully transparent to providers," Mr. Mezger said. "And in most cases, our pre-funding rate is higher than the in-house collection rate on payment plans."
3. Automation, data aggregation and digitization improve the user experience. In addition to solving for affordability, PayZen's fully automated platform enables users to make payments or adjust their terms digitally in a self-serve environment, just as consumers are used to in settings outside of healthcare.
The platform also overlays on top of existing provider revenue cycle systems, such as Epic's MyChart and Cerner, from which it pulls patient data and aggregates it with externally sourced patient data. With that information, it then develops the right payment options and messaging around affordability for each patient without requiring any involvement from provider staff.
"Getting collection rates up can have a massive impact on margins," Mr. Mezger said.
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