The Benefits of Redefining Patient Finance Programs

Evolving the concept may increase revenue and foster patient relationships

As the trend toward consumerism continues, growing numbers of health systems and physician group practices are seeking creative ways to increase revenue and improve patient engagement. Many are finding that modern patient financing programs help fill the need quite well.

The healthcare industry is evolving the concept of patient financing programs past only serving as a last-resort option for those unable to pay their bills. Now, the same underlying concepts and financial tools are helping organizations optimize their revenues and foster stronger relationships with their patients, regardless of financial circumstances.

Patient “Financing” is Evolving

Patient finance programs are certainly not new, and they really haven’t changed much until recently. Rather than forcing patients to pay for a given procedure or episode of care in one lump sum, they offer patients, either directly by a hospital or through a third party aligned with a hospital, the opportunity to pay for care over a period of time. They are actually not too dissimilar to automobile or real estate financing programs where the amount owed is financed over a certain time period, dependent on factors like interest rates and the given time period to pay.

What has evolved, however, is the delivery and use of so-called “financing programs” among patients, as well as the willingness and desire of organizations to adopt them on a wider scale. Historically, such programs have been viewed as last-resort options typically used only by those unable to meet their healthcare expenses. This is no longer the case. There are several factors affecting this change.

First, growing numbers of providers want to accelerate revenue to offset deficits caused by the current state of payer reimbursements; they don’t want to wait for payment any more than restaurants want to wait to be paid for the dinners they served last night.

Next, healthcare has the potential to be prohibitively expensive. Even people considered well-to-do by most standards can be just one procedure, accident, chronic condition or heart attack away from struggling to pay their healthcare bills.

What’s more, even those patients who can afford their care are increasingly looking for ways to pay in installments like they do for so many other products and services they buy, such as their cars, their homes and even their iPhones. Indeed, the ‘consumerization’ of healthcare is a very real phenomenon and is one that is influencing how healthcare is being paid for.

As a result, savvy healthcare organizations are approaching traditional financing in new and innovative ways, engaging patients financially early in the process and making payment programs applicable to all consumers, not just to those on the lower rungs of the socioeconomic ladder. In the process both sides win. Healthcare organizations have more confidence they will get paid for their services, patients get payment terms more amenable to their financial situation and both sides benefit from the greater engagement fostered by such arrangements.

Effective Program Characteristics

Leveraging the concept of a financing program, however, is more than just a matter of buying all the parts, putting them all together and calling the result a patient payment or patient financing program. A better approach is to start with the end in mind and think through the various tools needed to reach your end goals: optimized revenue and greater patient engagement.

In fact, multiple studies show that a provider’s effectiveness at handling patient payments and financial interactions is a significant predictor of both revenue return and referral business.

Below are some key characteristics of an effective healthcare financing program:

  • A good program is flexible. In the same way that Netflix knows that my friend and I don’t watch the same shows, health systems must recognize that patients have different financing preferences and needs. This means offering a range of payment options that serve two purposes: encouraging payment of healthcare bills and equally deterring nonpayment. For example, encouraging patients to pay might consist of offering an interest-free automated payment plan for six months to encourage full payment by the end of that period, while a charging interest after the six month mark would likely deter a patient who is able to pay from nonpayment. A good program gives options that provide both convenience for patients and accelerate payment to the provider. Flexibility enables patients to pay balances quickly or spread it out over time as circumstances warrant.
  • A good program is properly marketed. Today’s consumer needs to feel that their provider is working collaboratively with them to help find the best payment arrangement. Presenting financing opportunities early in the care experience as an additional payment option has the potential to bolster the patient’s engagement and satisfaction and in turn, his or her propensity to pay.
  • A good program is priced to benefit the patient and mitigate risk to the provider. A good patient payment program should be mutually beneficial. Patients should feel incentivized to participate in them, while providers should see increased payments, faster collections and lower risk. A good example is to offer a six month, interest free auto-draft payment plan which is held in-house and executed through a provider’s payment software with an interest option after six months.
  • A good program is efficient for staff. Finally, it is vital to keep the cost of collecting patient payments as low as possible. The ease and accuracy at which transactions can be processed and posted to core systems to keep account balances updated is critically important when considering extended term arrangements for a consumer community. To this end, many healthcare organizations leverage technology to automate short-term payment plans and engage the services of third parties for extended financing programs.

Engaging Patients in the Future

Healthcare delivery is multifaceted, but people oftentimes base much of their favorable or unfavorable views of a healthcare organization on their most recent interactions, which often have to do with billing and payments.

Offering healthcare financing options as another way to proactively serve patients goes a long way toward improving and maintaining patient satisfaction and financial engagement as well as enhancing the provider’s bottom line.

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