Benefits of Payment Plans:

According to a recent Bankrate survey, 61% of Americans are unable to pay an unexpected $1,000 bill without borrowing money or selling possessions. As the average medical deductible is nearly twice that amount, healthcare organizations must rely increasingly on patient payments. Unfortunately, the math doesn’t work. How can providers avoid bad debt if many patients can’t afford to pay?

Revenue cycle leaders often assume that patients will be less likely to pay-in-full (PIF) if they offer flexible payment options. They worry net patient revenue will also slow by extension.

Their concern is understandable; after all, why would patients pay the full amount if they don’t have to? It turns out, this assumption is unfounded. After rigorous testing, Patientco’s data science team discovered that giving patients the option to pay over time via smart payment prompts accelerates patient payments. Furthermore, we found that offering payment plans boosts patient satisfaction and may slightly increase PIF.

Experiments Lead to Informed Decision Making:

Patientco’s team hypothesized that, with a thoughtfully designed interface, offering payment plans would enhance the patient financial experience without impacting PIF. To confirm this theory, we used PatientWallet® (our online payment portal) to conduct A/B tests.

We compared two randomized groups of patients. Upon logging in to PatientWallet®, patients in Group A and Group B were given the choice to “Pay Account Balance” or “Pay Another Amount.” If “Pay Another Amount” was selected, patients in Group A could make a partial payment. However, for Group B, our engineers designed a smart workflow that offered a self-service payment plan tailored to our client’s business rules (i.e. minimum monthly payment, maximum time period).

The Results:

After measuring 800 unique online payments over 90 days at one healthcare organization, our team found that giving patients a more flexible financial experience decreased our client’s average days to pay (ADTP) by 12.8% (almost three full days). Additionally, their patient satisfaction score increased from 94.9% to 96.3%. Furthermore, our analysis suggests that PIF rates remain stable, regardless of whether patients are presented with other payment options. To our surprise, this client’s PIF also marginally improved (~1%) after they introduced self-service payment plans.

In a follow-up experiment, we replicated these results with a larger patient population. This experiment generated roughly $4 million of committed patient payments for multiple health systems without impacting their PIF or reducing payment velocity. Without flexible self-service payment methods, this health system may not have captured these payments.

Given these insights, what should your organization do?

The Bottom Line:

1. Utilize payment plans.

Payment plans increase collection rates and establish patients’ commitment to pay.

2. Follow the data.

High-performing organizations routinely conduct multivariate tests to help inform decision making, improve patient engagement, and also optimize revenue cycles.

3. Tailor UX to improve outcomes.

Consumer-focused technology and payment options enhance the patient financial experience and also yield better results.

Above all, don’t let the fear of slowing payments get in the way of offering self-service payment plans. With smarter design, a carefully crafted user experience, and data to objectively measure results, your organization can accelerate patient payments, ensure future revenue capture via commitments to pay, and also enhance the patient financial experience. Furthermore, this is accomplished without negatively impacting PIF.

More payment options equal more payments and happier patients.

Keep an eye out for our next analysis, in which we’ll examine payment plan attributes that can maximize enrollment while minimizing drop-outs.

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