Why Enhanced Patient Financing Is Now a Necessity
Rising health care costs are leaving many patients struggling to keep up with their bills. The cost of an unexpected medical visit can quickly deplete a patient’s savings or, in some cases, be entirely out of the person’s budget. This leaves a stressful gap between what patients can afford and what they owe. Studies show that most Americans can’t handle an emergency expense of $400 or more.
At the same time, people need to stay healthy and get access to required services, yet 37% of patients report they would skip a treatment if the practice didn’t offer a financing program. Offering personalized and flexible payment options allows you to help patients get the care they need most while helping your practice stay financially healthy. And with medical costs continuing to rise, patient financing has transformed from a nice-to-have service to an essential service for many people visiting your practice.
Financial responsibility is shifting from insurer to patient
People are paying more for health care costs due to high deductibles, rising copayments and uncovered services. A study published by the Journal of the American Medical Association (JAMA), found that health care spending in the U.S. rose nearly a trillion dollars between 1996 and 2016. Health care spending averaged $11,000 per person during 2017, and that cost is expected to rise to $17,000 per person by 2027.
Costs are shifting from insurers to patients, and even patients with health insurance struggle to pay out-of-pocket expenses. One in four Americans reports skipping required medical care due to costs. Flexible and personalized financing plans help people afford the rising cost of health care. For example, a patient may need a service but be unable to pay the entire balance at one time. Customized payment options allow patients to select a plan that fits their budget and to feel less stress about paying for health care.
At the same time, the practice benefits from faster payments and less bad debt. The practice can start collecting consistent amounts of revenue or sell the receivable upfront and get paid at once.
Patients expect financing options
Patients are receiving more streamlined and more transparent experiences from all types of businesses, everything from online shopping to grocery delivery. Most people (77%) say it’s “important” to “very important” to understand costs prior to receiving care, and over half (53%) want to talk about financing options before the visit. However, only 18% of people surveyed report that practices spoke with them about financing options within the past two years.
The issue of financing is especially critical for millennials. The study found that 40% of millennials reported they would be “likely” or “very likely” to switch providers if a competitor offered zero or low-interest financing options.
The environment is changing so that patients not only prefer financing options, but they also expect them. People want to talk about the amount of their bill, since they’re paying more of it, and they want to understand financing options upfront. Consider the following:
- About three-fourths of survey respondents (75%) asked about payment options.
- Most patients (87%) expect their practice to provide long-term financing options.
- Nearly 89% reported they need a year or longer to pay for health care expenses.
In addition to payment options, people also want easier and more simplified transactions. They want to pay more of their bills online or through mobile devices, and they want to do it with less work on their part.
Patients want a more modernized transaction
The days of paper statements and writing physical checks are long gone. However, many providers are still sending paper bills and expecting patients to mail checks. People are paying an increasing number of their bills digitally, and they want these same experiences from medical practices, whether they’re setting up a payment plan or paying the balance in full.
Not surprisingly, over half of U.S. consumers (59%) reported they want a digital healthcare experience similar to that of retail. Practices are using a variety of simplified payment options to deliver this experience, including:
Card-on-file technology. Patients already are using card-on-file technologies to order products online, have takeout delivered to their homes and get groceries delivered. They want these same experiences at the doctor’s office. Practices can use card-on-file technology to allow patients to automatically pay their bills after insurance adjudications.
On-the-go payments. Practices can enable on-the-go payments and get paid faster by allowing patients to pay their bills from smartphones or tablets. The practice can send payment details directly to the patient’s smartphone or tablet, and the patient can pay using their devices. Patients also can set up payment plans using the same platform if they can’t pay the entire balance upfront.
Customized, practice-branded payment portals. This type of tool enables patients to make payments at their convenience through an online portal. If patients can’t pay the entire balance upfront, they can set up personalized payment plans that meet their budget.
A recent report found that 79% of consumers still receive paper medical bills, yet only 21% want to pay the bill by check. What’s more, 65% of people will consider switching practices for a better payment experience, which makes it critical to modernize your payment options and provide flexible and personalized payment options.
Financing options improve patient satisfaction
With patients’ expectations rapidly changing, practices are increasingly concerned with the patient experience. As patients have begun shouldering more of their medical costs, they are shifting to being “consumers” and practices are becoming “service providers.”
In any industry, becoming a successful service provider requires an understanding of the buyers’ needs and demands. Financial clarity and having resources to minimize the stress of paying for care are critical tools for elevating that customer experience.
Consider the fact that in one survey, 61% of patients reported their medical bills are “confusing” or “very confusing.” The patient’s experience starts long before they set foot in your practice or receive their bills. It starts by giving patients an accurate, upfront estimate of the medical costs and their portion of the financial responsibility. At this point, you can start having the conversation about how the person will pay for care.
If the patient is having difficulty paying for care, you can start talking about flexible, personalized payment options and how those might work with their situation. Having this conversation early allows your practice to avoid slow payment of receivables and potential bad debt. And from the patient’s perspective, it sets expectations upfront and creates a more positive experience. The patient doesn’t feel overwhelmed by receiving an unexpected bill in the future, struggling with the question of whether the bill is correct and, if it is, wondering how to pay it.
Patients are more willing to refer
Patients are struggling with unique challenges today, and when a practice does a good job of meeting their needs, such as in the case of offering flexible payment options, they are more likely to refer friends and families. What’s more, the quality of these referrals is higher than those of many from other sources. Consider the following:
- Referral leads convert 30% better than do leads generated by other marketing channels.
- Referred customers have a 16% higher lifetime value.
- Eighty-three percent of people are willing to make a referral after a positive experience — yet only 29% do. This is a critical point in why it’s important to remember to ask for referrals.
Patient referrals are critical to the success of a practice. One-third of people consult friends and family for referrals, and receiving a referral makes the person four times more likely to try a new medical practice. Compounding the positive effects of referrals is that many of these patients are making medical decisions for additional potential patients, such as children or aging parents.
Moving into the future
The concept of patient experience is only going to become more important in the future. Now that patients are paying a larger percentage of their health care costs, they care how much services cost, and they want affordable options to pay those bills.
Medical financing provides health care practices the ability to manage overhead expenses while waiting for patients to pay. This also provides an advantage for your practice over competitors that don’t have these options available.
Helping patients understand the cost of care and providing them with resources to pay for needed services allows you to create deeper and more meaningful relationships with patients. As a result, your practice is not only improving patient experience, but patients get the care they need, and you can ensure that your practice’s cash flow is steady in the future.