By Nancy Fabozzi
Principal Analyst, Digital Health
Frost & Sullivan
The goals of healthcare transformation are centered on improving care quality, controlling excessive costs, and driving greater value for all stakeholders. The need for transformation encompasses clinical care processes as well as operations and administrative areas where so many costly inefficiencies lie. That’s why there is a growing movement to re-engineer and rationalize revenue cycle management (RCM) across all registration, billing, claims processing, and payment pathways. By streamlining and improving the complex web of RCM functions, hospitals and health systems are better positioned to realize optimal revenue collection, prevent revenue leakage, and reduce unnecessary costs.
RCM reinvention can also help provider organizations succeed in patient and consumer engagement which is of critical and growing importance in today’s competitive market environment. To that end, RCM transformation is increasingly encompassing patient liability resolution. Collecting payments from patients is an area that has traditionally been one of the most important and sensitive aspects of RCM. And today, it’s ripe for disruption.
Some important market trends are converging that, together, are driving providers to adopt new approaches and new technologies to improve patient collections while simultaneously enhancing and elevating the entire patient financial experience.
Patients are Confused and Frustrated by Their Medical Bills
Complexity in payments drives a lot of additional RCM costs and also frustrates patients (and providers) to no end. The US healthcare system is extremely confusing. When it comes to paying bills, many times patients simply cannot understand what they owe and why. They are often even unsure of when exactly to pay their bill. Recent research from Accenture reveals that 52% of US health consumers have low healthcare system literacy—including 33% of consumers with no healthcare system experience and 19% who are total novices. Consumers with low healthcare system literacy cannot correctly identify terms related to their health insurance coverage such as premium, deductible, copayment, coinsurance and out-of-pocket maximum. Due to these generally poor levels of understanding of the meaning of health plans and benefits, many people are often very surprised to find out how much they may owe out of pocket, especially with high-deductible plans. The most important goal in patient financial experience is to enable more transparency and more straightforward transactions that can drive costs down and make the entire payment system more efficient and patient-centric.
Patients Are Paying More—and Expect Better Customer Service
High-deductible health plans (HDHP) are leading health consumers to bear a larger financial responsibility for their medical care. Market penetration of HDHP continues to grow. A report from The National Center for Health Statistics (NCHS) issued in July 2018 revealed that the percentage of those enrolled in an HDHP increased from 39.4% in 2016 to 43.7% in 2017. When patients have to pay more for their healthcare, they expect more in terms of customer service. Those heightened expectations apply to medical care as well as all other aspects of the overall experience of interacting with provider organizations. One of the biggest areas of dissatisfaction for patients has always been in payments and collections. It’s not only the increasing amount of money that people have to pay but oftentimes it’s the whole experience of having to figure out and then settle a bill that is so unpleasant and anxiety provoking. Thus, the growing complexity of patient payments is the second key driver for the need to improve patient financial experience.
Better Customer Service Means Digital Tools that Enable Convenience
Digitally-enabled consumers are increasingly motivated by factors of convenience and ease of use. Growing numbers of consumers have come to expect healthcare providers to deliver the same efficient, user-friendly, seamless and often mobile payment processes they experience with vendors like Amazon, Uber, Travelocity, and other retail and online businesses. Unfortunately, healthcare payments have lagged behind in consumer-friendly attributes. That’s a risky situation for healthcare organizations that are facing increasing competitive threats from non-traditional care providers like retail clinics and concierge medical practices that have a much more advanced and sophisticated approach to engaging customers.
It’s clear that patient financial experience plays a pivotal role in healthcare transformation. Digital patient engagement will only grow in importance as millennials start to enter into the healthcare environment. Excellence in patient financial experience will be increasingly dependent on deployment of smart, consumer-centric technology solutions like customized, personalized user interfaces, analytics for consumer decision support, mobile patient pay, voice-enabled chat bots, text messaging, and more. Expect a variety of technology vendors to bring new solutions to market to address this growing need. The Accenture 2017 Customer Experience Payer Benchmark Survey.
 National Center for Health Statistics. NCHS Fact Sheet, July 2018.
As Principal Analyst, Digital Health, for Frost & Sullivan, Nancy Fabozzi conducts in-depth qualitative and quantitative research on professional and consumer healthcare markets, companies and products. She provides market briefings and consulting services on a variety of healthcare issues, interacting extensively with leading global healthcare experts, including payors, providers, technology vendors, clinicians and industry thought leaders.
Previously, she was Manager, Market Intelligence, for Thomson Reuters, where she provided extensive research services to support tactical and strategic decision-making. Working collaboratively with leadership, she organized and managed the corporation’s global market intelligence infrastructure and developed innovative approaches to proactively tracking and sharing information on key market verticals.