It happens frequently that patients are presented with invoices they don’t completely understand or can’t afford to pay their payments on time. This often results in unpaid bills, leaving patients dissatisfied. Sometimes, unhappy patients decide to look for medical care elsewhere because they want billing procedures to be transparent.
Such situations definitely provide major difficulties for healthcare institutions. One in four patients is more inclined to change providers as a result of a negative encounter, according to the report. Younger generations tend to act faster, which increases the likelihood that they will move 5 times as frequently, damaging the reputation of healthcare organizations in the process. Their financial stability is weakened by the inflow of bad debt, which affects their profitability. Furthermore, low patient retention results in healthcare providers not realizing the full lifetime worth of their patients, which the U.S. Census Bureau estimates to be a significant $1.4 million per patient.
Patients are a major payer in the world of health services
Patients become important players of the financial ecosystem in the constantly changing world of health care. However, the landscape is changing rapidly, with deductibles soaring and a significant portion of the population facing the challenges of being underinsured or even uninsured.
The Surge in Deductibles:
As per the Kaiser Family Foundation, deductibles are on an upward trajectory, creating financial hurdles for patients seeking healthcare services. Notably, the average family high deductible health plan (HDHP) now demands a substantial $4,766 deductible before most health coverage takes effect. This represents an alarming increase of over $1,000 in just a decade.
Even for those without an HDHP, a staggering 88% of workers with single coverage are required to pay an annual deductible before their healthcare plan covers any services. This upward trend in deductibles places a growing financial burden on patients, impacting their access to essential healthcare.
The Dual Challenge of Uninsured and Underinsured Americans
In the year 2021, more than 8% of the U.S. population under 65 found themselves uninsured, and a substantial number were underinsured. The confluence of escalating deductibles and a median household income of $70,784 paints a stark picture of the underinsurance dilemma. This situation has profound implications for healthcare providers, leading to delayed care, particularly in chronic care maintenance, resulting in poor health outcomes, preventable hospital visits, and bad debt for healthcare providers.
Uncertain Financial Futures
Compounding the challenges, personal financial futures remain uncertain for many Americans. Despite some inflation relief in 2023, the lingering uncertainty about future finances adds another layer of complexity. Paired with an inflation-weary outlook, this financial concern is poised to significantly impact healthcare organizations, necessitating strategic responses to ensure financial sustainability.
Denials: A Pervasive Challenge in the Healthcare Landscape
Payer denials have reached an all-time high, escalating to 11% of all claims in 2022—a substantial 8% increase from the previous year. This poses a significant problem for patients, as denials often result in protracted appeals or overturned decisions, leaving patients and providers in financial limbo. The consequences are dire, with patients and providers potentially paying more than they should, exacerbating the financial strain on both parties.
The case for a more patient-friendly financial experience
The desire for a more patient-friendly financial experience has evolved from a choice to a fundamental necessity in the modern healthcare environment. With economic concerns and escalating healthcare costs, patients are increasingly discerning, seeking clarity and predictability in their financial obligations related to care. Today’s healthcare consumers are not just passive recipients; they actively engage in understanding and questioning the costs associated with their healthcare services.
The Patient's Quest for Financial Clarity
Gone are the days when patients would accept medical bills as enigmatic documents to be settled without much scrutiny. Questions concerning the expense of healthcare these days sometimes come up during the appointment scheduling process or even before a service is rendered. Patients desire positive consumer experiences throughout their healthcare journey, encompassing convenient patient-scheduling, personalized billing messages, and flexible payment options.
The Growing Pressure on Healthcare Providers
However, as patients demand financial clarity, healthcare organizations find themselves under increased pressure, particularly concerning bad debt and charity care. The gravity of the situation is underscored by the startling number that since 2000, U.S. hospitals have supplied over $745 billion in uncompensated treatment, including over $42 billion in 2020 alone.
Several factors contribute to this explosion of uncompensated care, including coverage changes, uninsured and underinsured patients, and the rising responsibility placed on patients for healthcare costs. Of these, a lack of financial transparency emerges as a pivotal factor. The absence of clear and upfront information on financial obligations leads to uncompensated care, patient leakage, and strained revenue for healthcare providers.
Mandates for Transparency:
Notably, transparency is not just a best practice but a legal requirement at many junctures in the healthcare industry. Healthcare organizations are obligated to comply with regulations such as the Hospital Price Transparency Rule, Advanced Explanation of Benefits (EOBs), Good Faith Estimates, and more. The purpose of these rules is to make sure that healthcare practitioners are upfront with patients regarding the expected expenses of their treatments.
Accurate estimates are paramount, as highlighted by a study conducted by the Health Management Academy, revealing that 60% of consumers who receive inaccurate estimates or bills express a desire to switch providers. Beyond the realm of patient satisfaction, this contributes to poor clinical outcomes, as patients may defer necessary care due to cost-related concerns or frustration.
The bottom line is clear: as healthcare continues to evolve, providers must prioritize patient-centric financial experiences. By embracing transparency, leveraging advanced payment tools, and ensuring compliance with regulatory mandates, healthcare organizations can navigate the complexities of the financial landscape, ultimately delivering the clarity and satisfaction that modern patients demand.
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The Unparalleled Benefits of Automation for Patients and Staff
It is impossible to underestimate the significance of modern solutions for financial viability in the quickly changing healthcare sector. These days, automation stands out as the key since it provides unmatched efficiency and revolutionary potential. Whether discovering hidden current coverage, determining a patient’s likelihood to pay, or improving the patient experience in general, companies need to use automation to streamline workflows and guarantee long-term financial stability.
The Imperative of Automation
A new approach is required to remain financially viable in the present healthcare environment, and automation offers the solution. With advanced solutions, businesses can do more with less resources and are no longer able to afford them. Automation is the key to success in everything from understanding intricate coverage conditions to creating a seamless financial experience for patients.
The Role of a Robust Revenue Cycle Vendor
A key component of the automation process is choosing the appropriate revenue cycle vendor. In this area, a strategic partner can allow companies to automate manual operations, freeing up personnel for higher-value, more strategic work. This not only guarantees a healthy profit margin but also fosters a favorable financial experience for patients, which is an essential component of contemporary healthcare.
Identifying the Right Action
Automation empowers healthcare organizations to pinpoint the ideal course of action for each patient. By considering a myriad of factors such as coverage information, demographic and economic behavior, payer relationships, and financial policies, organizations can deploy the right type of enrollment, follow-up, or collections communications at precisely the right time.
Armed with accurate data, both front- and back-office teams can leverage automated workflows to engage patients effectively. Financial counselors can concentrate on enrolling patients likely to qualify for assistance or safety net insurance programs. Simultaneously, billing staff can prioritize patients with balances for tailored follow-up, ensuring optimal resource allocation.
Prioritizing for Better Outcomes
Data-driven insights provide invaluable guidance on where providers should channel their resources. Automation allows the prioritization of patients likely to pay their balances while earmarking those facing challenges in meeting financial responsibilities for tailored communications and payment plans. By eliminating human judgment, analytics-driven workflow assignments ensure equitable treatment for all patients.
Expediting Financial Clearance
Predictive technologies play a pivotal role in expediting the financial clearance process. By gathering accurate patient data in advance, organizations can facilitate early conversations about coverage or income confirmation. This proactive engagement not only streamlines the financial clearance process but also reduces stress for patients, fostering a positive experience before, during, and after their healthcare visit.
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The Three Cs for a Seamless Financial Experience
Encouraging patients to understand and manage their financial responsibilities is essential in the constantly changing healthcare environment, where increased deductibles and out-of-pocket expenses are the standard. In addition to improving patient financial experiences, the three Cs—Communication, Clarity, and Control—can help healthcare providers increase cash flow and streamline operations.
The Challenge of Higher Deductibles
Rising deductibles result in increased bills and larger out-of-pocket costs for patients. A recent Kaiser Family Foundation survey found that 44% of insured people worry about paying their deductible before their health insurance kicks in, demonstrating how shocking these expenditures may be. This financial strain places an additional burden on healthcare providers, contributing to revenue cycle strain and uncertainty.
The Three Cs: A Blueprint for Patient Empowerment
- Communication: Proactive and proper communication is paramount for empowering patients. Most patients intend to fulfill their financial obligations, but the lack of clarity can lead to anxiety. By informing patients about what to expect early in the process, healthcare providers not only alleviate anxiety but also foster trust and a positive perception of their organization. Engaging patients through effective communication sets the stage for a smoother financial journey.
- Clarity: Providing clear and concise explanations of what patients will owe and why is fundamental. Full transparency enhances patient financial literacy, preventing surprises and building loyalty. When patients comprehend their obligations and can plan for expenses, they are more empowered to seek necessary healthcare services and fulfill their financial responsibilities. Clarity is the cornerstone of a positive patient financial experience.
- Control: Offering patients a choice in how they pay builds on the foundation of communication and clarity. By providing diverse payment options, healthcare providers give patients a sense of control over their financial responsibilities. For instance, allowing patients to split bills into manageable chunks over a set period fosters a feeling of ownership and empowerment. This not only enhances the patient experience but also facilitates the collection of full payments in a more expedited manner.
Before Care: Engage Patients Early
The three Cs should be implemented early in the patient’s journey, preferably before non-emergent care begins. Key steps include verifying patient identity and coverage, estimating patient and payer responsibility, exploring hidden coverage options, and assessing eligibility for assistance programs. Offering financial assistance and payment plans for substantial balances at the scheduling stage sets the tone for a transparent and empowering financial experience.
After Care: Give Them the Whole Picture
Post-care, patients often receive fragmented communications. To achieve true financial transparency, healthcare providers should present the whole picture early and consistently. Patient financial communications should outline outstanding balances, payment history, patient and third-party payer responsibilities, and proposed payment plan options. Providing convenient ways to pay further ensures a seamless financial experience for the patient.
Empowering Staff with a Consumer-Friendly Experience
As the landscape of healthcare evolves and patients grapple with growing out-of-pocket medical costs and the impact of inflation, a fundamental shift in patient behavior is evident. Patients now actively seek consumer-friendly experiences within the healthcare realm, whether opting for telehealth visits or demanding upfront cost information. Recognizing this shift, revenue cycle teams are on the lookout for technology that not only enhances the patient experience but also empowers their staff to navigate these challenges seamlessly.