What Retailers Have in Common with Healthcare Providers

By Bird Blitch, Patientco CEO

This article originally appeared in Group Practice Journal.

When you think of the very best in consumer experience, a few names immediately spring to mind: Nordstrom, Amazon, Hilton. They each have built their success on valuing the customer above all else with easy transactions, no-hassle refunds, round-the-clock conveniences, and ongoing personalized communication strategies that generate repeat business and inspire loyalty. What do these retailers have in common with most healthcare providers? Not much. But that’s changing.

While providers have spent a great deal of time on finding ways to clinically engage patients, very little thought has gone into understanding the value and means for financially engaging them. Before the Affordable Care Act, some might argue they didn’t have to: Payers footed the majority of the bill, and the remaining patient portion of the cost could be written off as bad debt. Today, the spiraling cost of health care and corresponding growth of high-deductible health plans have changed everything. In the last decade, employees’ share of healthcare costs has increased nearly 150 percent.1 With more than half of employer-covered Americans carrying $2,000 deductibles, as much as 35 percent of provider revenue now originates with patient payments.2

In an era when patient financial responsibility is expected to grow rapidly as a percent of overall provider revenue, it is critical for healthcare providers to increase patient payments both efficiently and effectively. It is also crucial that they understand the huge, and sometimes negative, impact that activities related to patient payment (such as collections) can have on patient satisfaction, patient engagement, and outcomes.

Lessons From Outliers

When it comes to financial transactions, health care lags behind many commercial sectors, such as banking and retail. A 2012 Institute of Medicine3 report took the industry to task for being slow to adopt proven service innovations, saying that if banking functioned like health care, simple ATM transactions that typically take seconds would take days or longer.

Consumers are savvier than ever and demanding new approaches to traditional services, including billing, payment, and other financial processes. Providers who want to keep their patients’ business will have to earn their loyalty. To do so, practices should consider these financial engagement best practices from other industries:

Simplicity

Consumers want to be able to see and understand exactly what they are paying for. For example, a hotel bill that doesn’t clearly explain the charges such as lodging, room service, and Internet will likely be contested—and that is exactly what is happening to providers when patients go to pay. Patient billing and Explanation of Benefits (EOB) documents are often confusing. The individual may receive treatment at a single location but receive multiple bills from various providers, all written in a language that is specific to the industry, such as Current Procedural Terminology (CPT) codes. This confusion impacts providers’ ability to collect on patient debt. Moreover, a recent study4 published in the Journal of Economics found that most people in the United States don’t understand their health insurance plans or what is covered until they receive their medical bills, which exacerbates bad debt.

Simplifying patient billing—such as providing a unified bill that combines treatment across providers and translates treatment codes into plain language—makes it easy for patients to understand the services they are paying for and increase debt recovery. Also, including financial information that is outside the care episode—for instance, how much of the patient’s deductible has been met, details about copays, and insurance payments—go a long way toward helping patients better understand their financial obligations.

Transparency

Anyone who walks into a restaurant knows exactly how much the food costs, what is included in the price, and what type of service can be expected. Not so with health care. Provider organizations lack upfront pricing on treatments and equipment. In an essay for The New Yorker,5 Atul Gawande, M.D., a surgeon at Brigham and Women’s Hospital in Boston, notes that practices should strive to provide the same levels of quality control, cost control, and innovation as do chain restaurants.

The way health care is organized is changing, in large part because the way consumers pay for it is changing. As patients become responsible for a larger portion of their healthcare bills, it becomes increasingly important that they understand their expected out-of-pocket costs and resolve how they will handle their healthcare expenses before they incur the costs of services. Explaining the process on the front end both alleviates the back-end burden on accounts receivable staff and improves consistency, standardization, and patient satisfaction.

Convenience and Flexibility

Another crucial component in enhancing patient satisfaction through financial communication is offering flexibility. Flexibility makes patients feel like the provider is on their side, helping them meet their financial obligations in an adaptable time frame. Providing patients with the option to pay by cash, check, payment plan, or debit/credit card—either in the office, online, over the phone, or by mail—paves the way for prompt and full payment. Additionally, offering incentives, such as discounts for paying online, works well for some providers.

This adaptability helps ensure payment options and methods align with the preferences of the practice’s patient base. While it takes time and resources to set up customized payment options—technology is making it increasingly easy—what matters most is offering what is best for the patient. This extra effort makes the patient feel engaged in the process and confident in the overall quality of care.

Patient financial communications and engagement work together to shape the overall experience of care delivery. When patients are angry or upset about their bills, providers can wind up paying the price in the form of negative satisfaction surveys, poor verbal and online reviews, and lost business.

Strengthened Patient Engagement

Houston Healthcare, a full-service healthcare system—including two hospitals, three urgent care centers, and a primary care physician practice—that serves 300,000 patients in Warner Robins, Georgia, offers an example of how financial communications strengthen patient engagement. It recently revamped its billing statements to reflect the organization’s commitment to the patient experience and facilitate collections.

Recognizing the value in providing a consistent, positive financial experience in both the practice and facility settings, leadership leveraged Patientco, a patient-focused revenue cycle management (RCM) solution, to take advantage of user-friendly statements and easy integration with existing health information systems.

At Houston Healthcare, the new billing method starts at intake, when patients are informed about the copay or deducible for which they are responsible. Staff also work with patients to set up a payment plan, which expedites payment and improves cash on hand.

Switching from a legacy black-and-white statement, the new statement factors in thorough market research on patients’ reception to a medical bill, including easily understood icons, a clear layout, plain language, and an intuitive color palette that changes with urgency if the bill has not been addressed. In just 60 days, the organization has seen an improvement in patient payments and customer feedback, receiving online payments within days after statements are received.

Another important element of the patient-focused RCM solution is that it allows customers and staff to quickly pull up a history of the account that shows activity, payments and Health Insurance Portability and Accountability Act (HIPAA)-compliant secure message correspondence. While the best online payment services are easy to understand and navigate, that’s not enough to make a successful patient revenue cycle solution. The best solutions also include features to keep patients engaged, such as e-mail reminders and online payment scheduling. Instead of ignoring bills, patients at Houston Healthcare now have a vehicle for managing their payments by communicating directly with staff to resolve issues, provide additional insurance information, and choose from a number of payment options.

Putting It into Practice

Engaging patients, however, is not as simple as sending out a customer-friendly statement. Many providers lack innovative tools to bridge the gaps among billing departments and often are unable to collect self-pay up front or set up customized payment plans. As a result, these practices typically contract revenue cycle management to third-party billing offices and collection agencies—entities that not only charge significant fees for their services but also have no personal investment in the provider-patient relationship. This places the practice at risk because patients who have a negative billing experience are five times more likely to complain about that experience to another patient.6

Three years ago, DeKalb Medical Physicians Group in Decatur, Georgia, was looking for just the kinds of tools that would bridge the billing gaps. The group, which is comprised of more than 100 providers who see 70,000 patients a year across 27 locations in the metro-Atlanta area, frequently missed out on payments for services because it lacked a sufficient solution for patient payments.

As with many other practices, DeKalb patients would receive a bill after treatment. However, an increasing portion of them began going unpaid either because patients felt they were too complicated to understand or because the practice lacked payment options—or both.

The practice addressed these concerns by implementing a cloud-based platform that enables patients and administrative staff to quickly access bills. The system offers a variety of payment methods, including point of service (POS), online, phone payment options, as well as the traditional mailed check. It also provides insight into payment preference data, which in turn customizes the practice’s billing systems to maximize patient payments. Payments are processed through the system and auto-posted to DeKalb’s existing Hospital Information System (HIS), requiring minimal human resources time.

With an automated RCM solution in place, DeKalb’s total patient dollars increased by 32 percent, from $2.5 million in 2010 to nearly $3.4 million in 2013. Total patient payment transactions also grew by nearly 20 percent during this same period—proof that patients were paying more with each transaction due in large part to the dynamic billing statement and expanded automated payment utilization.

The Bottom Line

As consumerism and value-based purchasing continue to gain traction, providers are looking to lessons from other business sectors such as retail, hotel, and banking to engage patients, facilitate financial transactions and gain the competitive advantage.

Leveraging automated tools from a single payment platform allows practices to connect all parties—financial services, physicians, and patients—and have an integrated process for collecting self-pay dollars at every opportunity. For example, one of Patientco’s providers implemented an online account management program and, on average, receives 88 percent of all payments paid in full.

Instead of paying a third-party billing company, automation allows providers to bring billing and collections in house at a significant savings. It also reduces the time and cost to collect from patients because it requires very little staff or phone time, which means that practices can continue to grow without hiring additional full-time equivalents (FTEs). Another Patientco client used a patient financial engagement system to reduce the cost of collection from 4.0 to 2.5 percent, which represented a 37.5 percent reduction in overall spend in managing the process.

There is more to patient engagement than clinical benchmarks and outcomes. Patient financial engagement also yields significant benefits, such as greater satisfaction, loyalty, and accountability for patients and better financial health for practices. Ultimately, the goal is to meet consumers’ expectations regarding the financial side of their care in the same way they are met on the medical side. Understanding the connection between patient engagement, satisfaction, and financial transactions is the key to success.

References

  1. Health cost increases in 2013 were lowest in decade: Aon Hewitt. October 17, 2013. Insurance Journal. At https://www.insurancejournal.com/news/national/2013/10/17/308500.htm. Accessed March 19,  2014.
  2. Revenue cycle best practices guide: effectively managing the healthcare revenue cycle. 2013. Danvers, MA: Xtelligent Media, LLC; EHRIntelligence. At https://ehrintelligence.com/wp-content/uploads/2013-11-12-RCM-Best-Practices-with-ads_mac.pdf . Accessed March 19, 2014.
  3. J. Hanrahan. September 7, 2012.  Lagging behind: healthcare information. Policy Interns. At https://policyinterns.com/2012/09/07/lagging-behind-healthcare-information-technology/ . Accessed March 19, 2014.
  4. Consumers don’t understand health insurance, Carnegie Mellon research shows. August 1, 2013. Pittsburgh, PA: News release; Central Media Relations, Carnegie Mellon University. At https://www.cmu.edu/news/stories/
    archives/2013/august/aug1_understandinghealthinsurance.html
    . Accessed March 19, 2014.
  5. A. Gawande. August 13, 2012. Annals of health care: big med; Restaurant chains have managed to combine quality control, cost control, and innovation. Can health care? New York: Condé Nast; The New Yorker. https://www.newyorker.com/reporting/2012/08/13/120813fa_fact_gawande?currentPage=all . Accessed March 19, 2014.
  6. Customer satisfaction and self-pay: the hidden opportunity. April 2011. Presentation transcript. Waltham, MA: Connance, Inc. https://www.slideshare.net/Connance/customer-satisfaction-and-selfpay-the-hidden-opportunity . Accessed March 19, 2014.

 

 

 

 

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