Health Tech, MedCity Influencers, Payers, Consumer / Employer

Why it’s time for hospitals to modernize their payment systems

By improving billing and payment systems, healthcare providers can help ease what is a common, anxiety-inducing burden for many patients.

The Covid-19 pandemic forced nearly every company in every industry to learn how to operate differently, and that’s especially been the case in healthcare.

For patients and doctors, the most significant change was telehealth technology for checkups and diagnoses. While less than 1% of physicians reported using telehealth before the pandemic, more than half adopted it within months of lockdown.

What started as a necessary change ultimately made patients and doctors feel safer, and by now it’s clear that telehealth—which many patients say has improved the quality of care—is here to stay. It’s a lesson in how quickly—either due to external shocks or customer demand—technology can radically change established practices.

The promise of technology improving U.S. healthcare doesn’t end there. Now, two years after the pandemic began, there are several longstanding industry practices that healthcare providers can dramatically improve with relatively low investment —most significantly patient billing.

By improving how people both understand and make their payments, healthcare providers can help ease a common, anxiety-inducing burden for many patients.

Why healthcare needs to address its billing systems

Of all the stubborn challenges in our very complicated national healthcare system, one that is consistently frustrating for patients is billing. Medical bills can be intimidating, are written in language that can be confusing, and—more importantly—can sometimes be a challenge to pay all at once.

By any standard, it’s clear that the payment experience in healthcare is broken. Sometimes months, or even longer, after a procedure, patients receive multiple “bills” from multiple providers—often with inconsistent numbers—and are generally given limited options for how to pay.

More than just alienating patients, this flawed process impacts a hospital’s bottom line, since it leads to lower payment rates. According to the American Hospital Association, that can amount to a loss of up to ten cents per dollar of cost.

How to make billing better

Fixing this is partially a matter of technology, but it also requires rethinking the relationship between patients, hospitals and insurance companies. Many medical payment processes probably have not been critically examined in decades.

The highly evolved, consumer-first technologies of companies like Amazon have changed patient expectations forever. People have gotten used to paying for goods or services with a single click and seeing the details of their bills clearly spelled out. Newly accustomed to convenience and transparency, more people are demanding easier, frictionless payments in all walks of life.

Reducing or eliminating this friction in healthcare means not only making it easier for patients to understand their bills, it also means giving them the flexibility to make payments how and when they like. (This will also require internal stakeholders to become less top-down, and more responsive to patient needs.)

Reimagining payments can also make the billing process more transparent, a change which could help control costs. Increasing transparency would let all parties in the transaction—patient, hospital and insurance company—see what services genuinely cost, potentially leading to more competitive pricing.

Three things to consider when making your billing system more patient-centric

Reinventing what is a core process in any institution is never going to be easy, and getting it wrong can obviously have unwanted consequences. So, here are three things you should consider as you upgrade your payment systems. 

  • Find a partner that understands healthcare. It is critical that any healthcare provider looking to revamp billing find outside expertise to help, since it involves both financial and technical know-how. But not all experts are the same, and even some very sophisticated companies might not have much experience in healthcare. Finding the right partner is critical to making the initiative work.
  • Think in detail about your cybersecurity needs. A top priority for executives at healthcare providers is securing networks from cyberattacks by hostile actors. Stories of hospitals being shut down or held hostage due to ransomware are both common and frightening. Whatever partner you choose will also come with cyber vulnerabilities. Make sure this partner is transparent and has robust systems in place. 
  • Let the good of your patients be your North Star. While improving payments systems will surely help your bottom line by making it easier for patients to meet their obligations, the guiding principle in this transformation needs to be making their lives easier. Focus on making your system meet their needs first, and build out from there.

Urgent change, despite present challenges

Like much of our economy, the healthcare sector faces significant headwinds. In particular, the industry is facing labor shortages that might make it difficult for some institutions to undergo additional major disruptions.

Even so, the reform of payment systems is critical to keeping the highest quality patient care in the long term. And, unlike some other healthcare challenges, this is one where larger organizations need to take the lead, as smaller providers often don’t have the resources to spearhead major initiatives like this.

Healthcare providers should be champions of patient empowerment. A top priority needs to be making interactions with the system less frightening and exhausting, which can substantially improve patient well-being. Reforming billing systems is a great opportunity to do well by doing good.

Photo: cat-scape, Getty Images

Kerry Jessani is head of Healthcare, Higher Education and Nonprofit, Middle Market Banking and Specialized Industries for J.P. Morgan Commercial Banking.

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