The coming convergence of healthcare and financial services: patient-centered financial engagement

The following article comes from Kevin Fleming, Chief Executive Officer at Loyale Healthcare: 

Earlier this year, an opinion piece was published by Bill Copeland, Deloitte’s Vice Chairman, US Life Sciences & Health Care Industry Leader titled Convergence is Innovation for Healthcare, but Converge to What? 

In it, Mr. Copeland points out that “...convergence in healthcare is driven by the simple fact that consumers are not satisfied with the value and the cost of what is available to them in today’s marketplace.”

“Convergence," continues Mr. Copeland, “is a form of innovation only if the combined company’s product or service offerings break the preexisting competitive and economic barriers and constraints to offer something that has greater value to the customer for less cost and complexity.” He goes on to explain that, fundamentally, healthcare consumers are looking for three things from healthcare providers, or “Jobs to be Done”. They are:

• Help them stay in good health
• If not healthy, help restore their health to meet their goals
• Help them remain financially secure while meeting their health goals

Item three begs the question... Can healthcare providers converge with financial services and technology companies to deliver financial experiences that measure up to today’s more demanding healthcare consumer?

The answer, we believe, is yes.

We agree that consumers are not satisfied with the status quo. And nowhere are the manifestations of that dissatisfaction more troubling than patient behavior resulting from their healthcare providers’ inability to help patients remain financially secure while meeting their health goals.

Consider these statistics… 

• 64% of patients delay or avoid care completely because of concerns about the cost (1)
• 68% of patients with medical bills of $500 or less did not fully pay their providers in 2016, up from 53% in 2015 and 49% in 2014 (2)
• Patient Balances After Insurance rose 67% from 2012 to 2017 driving increases in patient bad debt and uncompensated care (3)

These sobering figures are indicative of a large and growing trend affecting patients in the U.S.. High patient out-of-pocket costs are blocking access for many. And for those who do seek care, these costs are adding stress to an often already stressful experience.

The figures are just as distressing to providers if not more. Operating margins in the healthcare industry are thin and getting thinner. In a financial perfect storm - patient bad debt, uncompensated care and market shrinkage attributable to care avoidance and abandonment have combined with declining reimbursements and increasing standards for quality and patient satisfaction. It’s no wonder many providers find themselves nearing the financial breaking point.

When it comes to patients’ financial experiences and their impact on provider financial viability, the status quo is plainly unsustainable. If indeed patients expect their providers to help them remain financially secure while meeting their health goals, then convergence in the name of innovation is no longer a nice-to-have. It is an operating imperative.

Financial services are not a core competency for healthcare providers, but by converging with companies whose core competencies include suitable financial services expertise and the technology to deliver those services seamlessly within the continuum of patient care, providers can cure their most pressing financial problems while improving patient care and satisfaction. Importantly, this innovation will serve to inoculate these providers to the market disruption this environment is already breeding.

What the successful convergence of Healthcare and Financial Services looks like

Mr. Copeland points out that innovation through convergence is evident in some of the most successful consumer companies. Companies like Amazon, Apple and others that have “created their own marketplaces by filling the unmet needs of consumers with integrated services to create greater value for the customer.”

If we acknowledge that patients expect their healthcare provider to help them remain financially secure while meeting their healthcare goals, then the following Patient Financial Engagement elements are required.

• It’s integrated with their care experience from beginning to end – As evidenced by the large percentage of consumers who delay or avoid care because of concerns about the cost, it’s never too early to engage with patients (and prospective patients) to help them with their concerns. It begins with public communications conveying the hospital’s or health system’s commitment to finding ways to remove cost as an obstacle to care. It includes upfront pricing transparency; payment plans; clear, easy-to-understand billing; and communications that align with patient preferences.
• It offers options to make care affordable – Within any patient population there are essentially four different patient payer types. Those who are willing and able to pay (obviously the group responsible for most patient-pay revenue), followed by willing but unable, able but unwilling and unable and unwilling. It may be that the willing and able group will pay sooner, even before treatment if a reliable price estimate is given. The unwilling but able, on the other hand, may alter their sentiment when presented with consolidated bills. Those who are willing but lack the financial resources need payment options that allow them to fit the responsibility into their household budgets.
• It’s responsive to patients’ and providers’ unique requirements – Although patient populations can be segmented into the four general categories described above, each individual within those segments is unique. The successful convergence of care with technology and finance would leverage data to develop payment plans, then offer the opportunity to adjust those plans when behavior change is observed. The same data would automatically design collection workflows that improve hospital collection staff productivity, allowing them to focus on activities with the highest value to the organization.
• It’s personal and intimate – The holy grail of this convergence incorporates data gathered from a wide variety of sources, platform-enabled scalability that incorporates a diverse array of point solutions for seamless execution across complex organizations, innovative patient financing and communications that honor every individual’s preferences and style.

Properly executed, the convergence of care with technology-enabled financial services will create a virtuous cycle. In this cycle, a typical patient’s experience may include the following:

1. The patient is attracted to the provider because of its proximity and reputation for care.
2. The patient then engages with the provider to learn more about what their treatment will be and to learn the costs associated with that treatment. If the costs exceed their ability to pay, engagement will include personalized payment plans to help them afford their care without placing too much stress on their household budget.  
3. Based on the provider’s proximity, reputation for care, pricing transparency and ability to help the patient pay, the provider will win the patient’s trust so the patient enters into their care experience free from the anxieties that can derail treatment and damage the prospect of building a patient relationship.
4. As the patient moves through the care experience a patient relationship is formed based on the quality and compassion of their clinical care. Care that is reinforced by compassionate, personalized billing and financial communications.
5. Following treatment, the provider-patient relationship will mature as the patient’s digital pathway into the provider’s organization continues to provide helpful financial information and timely, personalized communications until the patient’s financial obligation is fulfilled.
6. And finally, enthused by the quality of care and the relative ease of paying for it, the patient shares their experience with friends, neighbors and family, acting as an evangelist who attracts other peoples’ interest in the provider, including those who thought they could not afford it.

This scenario is not far-fetched. Providers that have embraced the convergence of healthcare with financial services to deliver transparency, personalization and affordability are already seeing significant improvements in top and bottom line performance. They’re earning higher patient satisfaction scores and burnishing their brands and reputations. Most importantly, they’re growing their most valuable long-term asset – patient relationships.

Specifically, the fast-approaching era of patient-centered financial engagement will be characterized and/or supported by the following inexorable industry trends...

• The democratization of personal health records, empowering patients to use personal, protected health information to their own health and financial advantage. Simply stated, the ability to “shop” their business to the provider offering the best value
• The industry-wide adoption of Point-of-Sale (POS), retail-oriented payment approaches, including credit cards and personal payment plans.
• The securitization of patient debt to diversify funding for patient financing and structured payment options.
• The convergence of clinical data with information on claims, charges and remittances, enabling analytics to optimize cost controls, care management, reimbursements and profitability throughout the patient care purchase lifecycle.
  Despite the powerful headwinds facing the American healthcare industry, the convergence of healthcare with financial services and the technology to support it represents an exciting opportunity for better care and better outcomes. This is innovation at its best.

Kevin Fleming is the CEO of Loyale Healthcare

1 CarePayment 20/20 survey, published December, 2017
2 TransUnion analysis Patients May be the New Payers, But Two in Three do Not Pay Their Hospital Bills in Full, June 2017
3 TranUnion analysis Patient Balances After Insurance Continue to Increase in 2018, Driving Bad Debt and Uncompensated Care (for commercially insured patients), June 2018