Imagine going to a grocery store that doesn’t list prices for any items. Still, you fill up your cart and head to the checkout, where you’re told you owe $500 with no explanation. Making matters worse, you later receive a bill in the mail with a bunch of codes and language you don’t understand. If this scenario feels familiar, it’s because it’s not unlike what patients often experience when it comes to healthcare bills.
Much has been written about overall patient experience, which refers to all the interactions patients have with providers. More attention is being paid, however, to an often-overlooked subsection of that experience known as the patient financial experience, which refers to the financial interactions patients have with the healthcare system. This includes everything from medical billing and payment to insurance coverage. A positive patient financial experience benefits everyone. Patients are less stressed and feel more satisfied with their overall experience, and health systems and health providers optimize revenue cycle management. This blog will explain what the patient financial experience is and why it’s important for health systems. It’ll also look at common challenges to improving the patient financial experience and how to overcome them.
Every interaction patients have with health systems regarding finances falls under the patient financial experience. There are generally three elements of the patient financial experience where patients have the most interaction:
At each stage, health systems should strive to provide clarity for patients, making patient payments as simple as possible, and provide a high level of support throughout the process.
As healthcare costs have skyrocketed in recent years, patients have shouldered a more significant portion of the financial burden. Many have opted for higher-deductible health plans, which increase out-of-pocket expenses. As those out-of-pocket costs have grown, patients have begun demanding more transparency from healthcare providers, as well as more tools to make their care more affordable and accessible.
Health systems that provide a smooth patient financial experience stand to gain in this environment, while those that don’t could suffer significant consequences. First and foremost, a poor patient financial experience has significant implications for patients. It can create financial stress, worsening outcomes and limiting a patients' ability to get critical care. For health systems, poor financial experience could lead to reductions in patient satisfaction and, ultimately, lost patients, which has a direct bottom-line impact.
On the other hand, a positive patient financial experience can have the opposite effect, boosting patient loyalty and satisfaction. Happy patients are also more likely to recommend their provider to others. A positive patient financial experience also has direct bottom-line advantages for health systems. When patients understand their financial responsibilities and payment options, they tend to move forward with treatment plans and pay on time and full, improving cash flow and reducing the risk of bad debt and collection costs. The result of happy patients is happy health systems, which can see significant bottom-line improvement.
Several major challenges with patient financing have put the patient financial experience in the spotlight. Health systems also have to contend with the shift in payment models, which puts more burden on them to collect. Health systems have traditionally relied on the payer reimbursement model, where payment is obtained from insurers. As patients shoulder more of the financial burden, however, health systems must manage more complex payment systems, balancing payments from both insurance companies and patients. Here are a few challenges health systems must address for patients:
High-deductible healthcare plans (HDHPs) have become the norm. As of 2021, 56% of American private sector workers were enrolled in HDHPs. With inflation and overall cost of living undergoing sharp increases, HDHPs offer patients a way to maintain lower monthly premiums. Of course, the tradeoff for patients is that they often have much higher out-of-pocket expenses before their coverage kicks in. This financial burden can be overwhelming. Without a means to cover their financial burdens, patients may delay care or simply avoid it altogether. It’s important for health systems to help patients understand the impact of HDHPs.
Outdated processes, technologies, or policies lead to outdated revenue cycles that are often paper-based and manual. The resulting delays, errors, or inefficiencies in billing and payments create serious challenges for patients. Third-party financial assistance providers can help health systems expand payment options for patients by providing affordable loans to help with out-of-pocket expenses. It can also remove health systems from having to manage patient financing. Outdated revenue cycles can also impact insurance verification, which can lead to delays in billing and payment from carriers. They can also lead to confusing bills for patients, which can lead to delayed payments or non-payment. Health systems that can simplify and modernize processes, technologies, and policies can make dramatic improvements in the patient financial experience.
As discussed earlier, with patients carrying a higher financial burden for healthcare, their demand for pricing transparency has only increased. The problem: the healthcare industry has been slow to adapt, leading to confusion and frustration for patients. Additionally, pricing for healthcare services can vary significantly, making it difficult for patients to compare costs and make informed decisions. Options for improving pricing transparency will be discussed later in this blog.
Insurance coverage can be complex and when patients don’t understand their coverage, they could be in for big surprises. If a patient inadvertently uses an out-of-network provider, for example, they can be stuck with a large bill. The same is true with prior authorization. If patients don’t realize they need prior authorization to receive a specific treatment, insurance companies can deny coverage. Health systems need to help patients by offering clear information about network coverage and out-of-pocket costs, as well as important policies like prior authorization.
There’s no cookie-cutter approach health systems can apply to improving the patient financial experience. Excellent communication and full transparency are the foundation of building a strong patient financial experience. The following tips can also help:
It should come as no surprise that communicating clear financial expectations with patients up front can pay serious dividends later. The more health systems can explain the costs associated with different treatments, available insurance coverages, copayments, deductibles, and out-of-pocket expenses, the more prepared patients will be for financial obligations. Brochures, websites, and face-to-face conversations are all opportunities to set expectations. It’s also important for patients to understand how they’ll receive their bills, as well as their financing options for paying out-of-pocket treatment costs. Health systems can also give patients access to their medical records, billing information, and other financial documents, with clear instructions on how to interpret them.
Providing cost transparency helps patients budget appropriately and make more informed decisions about their care. It starts with a clear treatment plan that outlines and itemizes estimated costs. Health systems should create itemized bills that clearly outline costs to help patients understand what they are being charged for and how much they need to pay. Health systems can also take advantage of healthcare price transparency tools to provide patients with cost estimates for services and procedures.
While most health systems collect copayments and coinsurance up front, it’s important not to let payments slip. For the patient, collecting payments up front provides clarity on overall costs, reduces stress, and helps them budget appropriately. It also helps avoid unexpected bills. For health systems, it reduces the risk of unpaid bills, as well as the administrative costs associated with billing and collections. It can also improve patient satisfaction, which improves outcomes, return rates and referrals. Collecting out-of-pocket expenses can be more challenging, however, especially when those costs are high, putting health systems in the difficult position of having to serve as financial advisors and banks for patients. It’s a role they’re not often equipped to play and that can take significant amounts of time and resources to fill. It’s another reason why many health systems are looking to third-party financing partners to handle the process, which increases patient conversion and improves cash flow.
The more means health systems can provide to give patients clarity and help them understand their financial obligations and provide them with patient options, the better the experience for both patient and provider. Health systems can maximize touchpoints before treatment, at the time of treatment, and after. Providers can reach out prior to treatment to explain insurance coverage, copays, and payment options. It’s also a good time to use cost estimator tools to help patients estimate out-of-pocket expenses. At the time of treatment, health systems can collect copayments and other payments, and offer payment plans for patients with larger bills. Finally, after treatment, health systems can follow up to provide information about their bills, insurance claims, and payment options. Online patient portals are also a great self-service mechanism to let patients view bills, insurance claims, and payment history.
Offering patients financial counseling and other options has increased in popularity recently to help patients cope with rising costs. It can add a level of personalized support to help patients navigate many of the complex issues described above, including complicated medical bills, insurance claims, and payment options. Counseling can help patients get personalized help to understand insurance coverage, as well as getting live answers to questions. Providing payment and financial assistance programs to qualified patients also helps them meet their financial obligations, while creating significant goodwill and loyalty for health systems. More recently, health systems have begun to partner with third-party financing companies, such as Future Family, which make affordable medical loans and personalized service available to qualified patients at minimal cost to health systems.
When patients have more control over their financial experience, they’re more likely to stay on top of payments. For example, health systems can give patients options for how they want to receive bills, as well as flexible payment plans using online payment portals or text-to-pay options. Online patient portals can also give patients the ability to manage their payment plans and view billing histories.
Technology may ultimately offer the most potential to help patients navigate their financial journeys, offering a way to improve service while also reducing costs for health systems. Offering resources and portals can automate insurance verification and authorization, for example. Technology can enable an end-to-end patient experience, from clinical to financial, to improve patient satisfaction and loyalty. The ultimate goal for health systems would be to use technology to create a seamless patient experience — from the moment a patient schedules an appointment to receiving a bill and making a payment. Online payment portals, electronic statements, text-to-pay options, text message reminders, and interactive voice response technology can all work together to create this seamless experience.
Future Family gives health systems a trusted partner to offer patients comprehensive financing options for a wide range of procedures — from fertility to cosmetic surgery, bariatrics, and more. With Future Family, health systems can offer patients up to $50,000 in financing with pre-approval in as little as 90 seconds. Future Family’s flexible financing options, low interest rates, and personalized care coaching help improve the patient financial experience, drive new patients, and increase conversion rates. And as the only five-star non-recourse financing option for health systems, Future Family ensures you’re not liable for any patient defaults or delinquencies. Learn more about how Future Family can help your organization improve the patient financial experience.
The patient financial experience is rapidly becoming as important — if not more important — than a patient’s clinical experience. The convergence of several factors will continue to drive that trend in the future. The popularity of HDHPs will continue to spur patients to seek a more transparent and personalized financial experience. It’ll also push them to learn more about their healthcare costs, seeking providers who make that information clear and concise.
As healthcare organizations continue to shift to a more value-based care model, a positive patient financial experience can contribute to better patient outcomes and overall satisfaction, a win-win for both patient and provider. So, too, can the continued shift to telemedicine in the wake of the COVID-19 pandemic. A seamless digital patient financial experience, including online payments and electronic statements, as well as offering patients financing options, will continue to reshape the provider-patient relationship.
What is the patient’s financial responsibility in healthcare?
A patient’s financial responsibility in healthcare refers to all out-of-pocket expenses related to that care. Most health insurance requires patients to pay a portion of their healthcare costs, with the insurance company covering the rest. Out-of-pocket expenses can include deductibles, copayments, coinsurance payments, and any other costs not covered by insurance.
How does patient experience affect financial performance for health systems?
Patient financial experience can dramatically impact financial performance for health systems. A positive financial experience leads to higher customer satisfaction, which often leads to more timely payments, higher patient return rates and more referrals. Poor financial experience, on the other hand, can lead to delayed payments or no payment at all. Poor financial experience also causes health systems to lose patients.
What is patient financing?
Patient financing helps patients pay for medical expenses not covered by insurance. Some methods of patient financing include payment plans, financial assistance programs and third-party financial assistance. These can be offered by health systems, financial institutions, or third-party financing companies.
What are examples of patient financial experience?
Some examples of patient financial experience include paying medical bills, dealing with insurance companies, managing medical debt, and receiving financial assistance.