Can Healthcare Catch up in a World of Digital Payments?
Latest posts by Tomer Shoval (see all)
- Can Healthcare Catch up in a World of Digital Payments? - July 10, 2013
Healthcare reform has delivered new potential benefits for patients. However, it has also forced hospitals to tighten their operations or face big losses.
Fortunately, other industries show us that the application of proven online and mobile payment strategies can reduce these pressures while benefitting patients.
Historically, hospitals offset regulatory revenue pressures through a reliance on public payers and private health insurers for revenue. But as public money becomes less predictable and private insurers shift the cost burden to individual patients, hospitals must re-examine their payment and collections philosophies.
Overall, five major trends are converging to put stress on the traditional revenue mix for hospitals and their financial outlook.
1. Growing patient out-of-pocket responsibilities. As part of the consumer driven healthcare trend, health insurers are shifting a greater portion of costs to patients through high deductible health plans and higher co-pays. For hospitals with legacy payment platforms, this has led to extended payment times, increased overhead for larger patient collection efforts, and a greater risk for bad debt from non-paying patients.
2. Medicare payments based on quality of care. Medicare reimbursements are a key source of revenue for hospitals. New health reform legislation links these Medicare reimbursements to patient care and satisfaction through Value Based Purchasing (VBP). This means that higher patient satisfaction scores result in a higher percentage of Medicare reimbursements. Similarly, low scores could result in financial penalties. Medicare payment rates will also be tied to hospital readmissions so that reimbursements can be cut if a discharged patient must return to the hospital because of a complication.
3. Uncertain Medicaid funding. Last year, the Supreme Court ruled that states would not be required to expand their Medicaid programs as originally mandated by the health reform act. Medicaid covers people with limited income, and the bill was aimed at expanding coverage for more uninsured single adults. This ruling means that hospitals that were expecting their patients to pay more for coverage may now face higher than expected costs to treat the uninsured.
4. Lower rates from commercial health plans. In anticipation of the federal health insurance exchanges that become effective January 2014, large health plans have begun to pressure hospitals and health systems to agree to lower rates. In some cases, insurers have asked hospitals to cut current rates by more than half. While this strategy will help keep premiums attractive for new customers shopping for plans, it could further strain hospital revenues.
5. Experimental payment models. In addition to these already significant revenue burdens, the federal government and many private health insurers are rolling out new payment models that introduce more uncertainty into hospital revenue streams. Bundled payments and Accountable Care Organizations are the hot, new thing in healthcare reimbursement. However, they force hospitals to work harder to capture savings because they require better coordination between the doctors and hospitals that treat the same patient. While the concept is promising from a patient perspective, none of these models has been around long enough to demonstrate savings.
While some of these new changes hold the promise of positive change for patients, they all create significant financial and administrative hurdles for hospitals. And even as patients win small gains, insurers will continue to push high deductible plans, which will force individuals to more closely manage their medical care and their medical bills. In response, some forward thinking hospitals and medical providers are exploring the application of online and mobile bill pay technology as a way to resolve their financial pressures and give patients greater control over their healthcare financials.
For those hospitals, online and mobile bill pay trends in other industries can act as a model for how to best apply these technologies in healthcare. Utility providers, retailers, and others show us that the convenience of online and mobile bill pay can help shrink payment cycles for hospitals, reduce bad debt, and increase patient loyalty – effectively mitigating many of the economic pressures they are navigating now. Innovative hospitals have an opportunity to engage their patients through self-serve payment plans, prompt payment discounts, and hospital loyalty programs. This is a powerful vision for the future of the healthcare industry where both hospitals and patients win.