Author: Mark Messick, MMessick@profitstars.com
While on vacation recently, I had a moment to reflect on my benefit elections for the upcoming year. For the last several years, we’ve chosen to elect a high deductible plan and put money into an HSA each pay period. It has helped us control costs, but we’ve also been lucky. Lucky that we’ve had no major medical issues or expenses that would have depleted the HSA and left us with a big bill. It got me wondering what I would do if the bill was bigger than what I could immediately pay. I’d probably ask the healthcare provider or the billing/collections company if I could make payments. And if I could have this problem – so could others, and what about all the people who don’t have an FSA or HSA to turn to? And even if they did, what’s the likelihood the bill is larger than what they have saved in one of those accounts? What about all the people who actually want to pay their bill, but need a flexible way to do it?
Having worked in this sector for a while, I have access to more information than most. I know, for example, that this growing problem of a patient’s ability to pay their bills is the number one obstacle for most healthcare providers. I’ve heard them say it out loud. There are entire conferences and tradeshows dedicated to the issue and finding ways to solve it. I attended one this summer and was shocked to hear large, national healthcare systems distressed about how to deal with it. Like most people, I thought it was a problem for the smaller providers who want to provide care but couldn’t financially bear the weight of extended payment terms. I also know that when patients don’t understand what they owe, they don’t pay. And when the bill is too large and a payment plan doesn’t exist, they don’t pay.
The accelerating cost of health care and the growth of higher deductible plans have made this very issue worse. In fact, in the last ten years, the patient responsibility portion has grown more than 150%1. As a result, the industry has seen a proliferation of technology solutions designed around helping providers collect more money faster. These platforms enable providers to more efficiently offer payment methods to take care of the bill. Electronic statements and portals for electronic payments have been emerging while other solutions have created easy-to-understand paper statements. Many are already helping to make a significant impact on the bottom line. Unfortunately, that only solves part of the problem. Because what happens to the provider’s cash flow when the patient chooses “payment plan” as the payment option, or needs extended terms. They wait for months and years for the actual bill to be paid in full.
This is where financial institutions can and should step in. Healthcare providers are tired of being the “bank” for their patients. In the past, most financing has come in the form of guaranteed issue. That means that an individual must be underwritten for both income and credit score. Unfortunately in today’s economic climate, very few applicants actually get approved in that model. But now there is a new model that enables the FI to leverage the payment stream and have the provider guarantee the payment. The platform works in conjunction with other services already offered so that the provider gets access to cash flow, the patient gets terms they can live with, and the provider gets a reduced workload.
1Health cost increases in 2013 were lowest in decade: Aon Hewitt. October 17, 2013. Insurance Journal. At http://www.insurancejournal.com/news/national/2013/10/17/308500.htm.