- 2019 will be the year of healthcare consumerism, according to industry experts. As patient financial responsibility increases, revenue cycle and finance leaders are finding it high time to align their business practices with consumerism.
Patient financial responsibility is up 11 percent, according to the most recent data from TransUnion Healthcare. The average person is now paying $1,813 in out-of-pocket costs a year for their healthcare services.
The patient financial responsibility upswing spells trouble for healthcare revenue cycles. As out-of-pocket spending increases, the likelihood of collecting full payment from patients decreases, consulting firm Crowe found using data from over 170 hospitals in 2017.
For most providers, accounting for the healthcare consumer in revenue collection strategies is a new way of thinking. Patient collection approaches are still largely paper-based and most providers are still developing consumer-oriented capabilities, like offering virtual access points and providing price transparency.
“The US health industry has often lagged other industries—think tech, retail, hospitality— when it comes to modernizing. Once thought to operate outside the greater US economy, the industry—with its byzantine payment system, complicated regulatory barriers and reliance on face-to-face interactions—is being disrupted,” experts at PricewaterhouseCoopers (PwC) stated in a recent report.
“The US health industry is looking less like a special case, an asterisk in the US economy, and is beginning to behave like other industries.”
Providers should be addressing healthcare consumerism in 2019 to effectively collect payments and attract and retain patients. Gathering consumer data, addressing healthcare price transparency, and offering convenient, low-cost care options are major strategies providers should use to account for the consumer in the revenue cycle.
USING DATA TO IMPROVE THE CONSUMER EXPERIENCE
Delivering a high-quality, consistent consumer experience is key to increasing revenue in the new healthcare economy.
“Health companies can strengthen their brand, increase revenue and manage cost by focusing on what matters most to their customers,” PwC’s Health Research Institute (HRI) stated in a recent report. “For example, provider executives from organizations that use customer feedback to inform their customer experience investments report realizing economic benefit from those investments, according to an analysis of HRI survey data.”
Looking at consumer preferences by segment is vital to realizing the revenue benefits, researchers added.
Consumer segmentation allows providers to identify the interventions worth trying and which will result in higher returns on investment. It allows providers to predict patient behavior and estimate the value of altering individual behaviors, such as improving patient adherence or switching providers.
But to executive consumer segmentation, providers may need more data than they currently have access to.
Patient and consumer data exists in silos across the healthcare industry. Each player has access to different information, and they are not sharing that data with other providers, the HRI found.
Only one-quarter of provider executives surveyed by the institute felt they knew enough about their patient populations to engage with them outside of the clinical setting in their daily lives. Another 78 percent also said they lack the data to identify the social needs of their patients.
However, forward-thinking providers should consider the following investments to access the data necessary for consumer segmentation:
- Create a data hub or contract with a data broker
- Work with a data aggregator
- Develop data partnerships with other healthcare stakeholders
- Commercialize insights
“Gaining access to data and analyzing them will be critical for matching patients with the services they want and need,” the report stated.
ADDRESSING HEALTHCARE PRICE TRANSPARENCY
As patients act more like retail consumers, they are demanding increased healthcare price transparency to understand value. About 77 percent of consumers want more price transparency in healthcare, research shows.
CMS is also pushing price transparency in an effort to empower patients to shop for lower-cost, higher-quality care. The federal agency recently required hospitals to post a list of their standard charges online.
However, providers are not well-equipped to meet the demand of consumers. Approximately 63 percent of providers in a 2016 survey said they have trouble providing sufficient price transparency. Additionally,18 percent said they don’t have a patient-facing cost estimation tool, 13 percent lack the staff to address price transparency, and 12 don’t offer enough convenient payment options.
A more recent study in JAMA Internal Medicine also found the percentage of hospitals that could not give consumers a complete price estimate actually increased from 14 percent in 2012 to 44 percent in 2018.
Price transparency can be difficult for providers. What providers charge for services is not generally what patients end up paying. Insurance companies pay the bulk and depending on the patient’s plan, the patient pays the remainder directly to providers.
Providing meaningful out-of-pocket cost estimates requires additional data and a patient-facing portal or tool to deliver the information to patients.
Software and other health IT systems that rely on historical claims data can help hospitals and health systems boost price transparency, explained Sean Lundy, CMPE, of the Hand & Wrist Center of Houston.
“It is critical for providers to use accurate estimates when collecting the patient responsibility, as inaccuracies can generate added follow-up expenses, such as refunds and bills, which may turn profitable procedures into losses,” he wrote.
“Since obtaining current allowable amounts directly from payers can be challenging, to say the least, providers should use software tools that assess historical data and estimate allowable expenses for specific payers and procedures.”
Partnering with a revenue cycle or patient portal vendor can also help providers develop a patient-facing tool that allows consumers to access cost estimates.
EXPANDING LOW-COST, CONVENIENT CARE OPTIONS
Consumers expect to not only pay for healthcare like they do in other industries, but they are also demanding more convenient options for getting services.
Office hours at a local primary care will not do for consumers who are focused value. Consumers are more willing than ever to go to lower-cost, convenient care settings, like retail clinics or even their own homes, to receive care.
A HRI survey found that 61 percent of individuals would use an at-home strep test purchased at retail store if the healthcare costs were lower than seeing a provider. Almost 50 percent also said they were very or somewhat likely to have stitches or staples removed at a clinic in a retail story or pharmacy for a lower cost.
Providers are recognizing that traditional care delivery settings are not aligned with the healthcare consumerism trend. And failing to address the consumer could lead patients to competing retail clinics or other low-cost providers.
“Many vertical and horizontal integrations are all happening because there's opportunity to serve the patient more like a consumer and the consumer is demanding better access, better choice, and hopefully better costs,” PwC’s Health Services Leader Gurpreet Singh stated. “All of the players that surround the consumer are making major adjustments and changes to deliver services to that consumer.”
Providers are making strides to provide convenient access options for consumers. However, consulting firm Kaufman Hall stated in their annual State of Consumer report that providers are still focusing on traditional approaches like developing urgent care centers and freestanding imaging sites.
More innovative approaches would be to establish a network of retail clinics or offer concierge primary care. Additionally, delivering more services and visits via technology would significantly improve the consumer experience, the consulting firm explained.
Consumers are more comfortable receiving digital care. Over three-quarters of patients (77 percent) are willing to have a virtual care encounter, and 19 percent have already done so, an Advisory Board survey showed.
“Across industries, consumers have become accustomed to using virtual technology for both real-time and asynchronous interactions. Healthcare providers can no longer wait to catch up,” said Advisory Board National Strategy Partner Tom Cassels.
“Providers have designed care access around their own convenience and will increasingly find patients willing to pay for their own convenience and alternatives to driving to physician offices for medical expertise,” Cassels continued.
With high-deductible health plan enrollment expected to increase and technology advancing, healthcare consumerism is here for the long haul. Providers should be retooling their revenue collection and care delivery strategies to ensure they are meeting consumer demands.
Failing to account for the consumer in the revenue cycle could result in dramatic financial losses as well as patient volume decreases.