Building a Diversified Revenue Stream Using Patient Payments

Updated on April 20, 2024

The recent outage at Change Healthcare sent shockwaves through the healthcare industry. With insurance claims processing and payments on hold, many providers are facing a cash flow crisis, impacting patient care and daily operations. This event exposed a critical vulnerability—dependence on a single operational path. 

The disruption is poised to be a catalyst for transformation. Patient payments, once in the shadow of insurance payments, now represent a critical revenue source that can help small to mid-sized providers weather the storm. It’s an area that, prior to the cyberattack, was becoming increasingly important in the face of high-deductible plans and patient-driven care.  Surveys suggest that the total medical debt owed in the U.S. was at least $220 billion at the end of 2021. These outstanding payments become a key part of sustaining profitable business operations and risk mitigation strategies. 

A Buffer Against the Unexpected

Providers impacted by the recent massive outage can pivot quickly to incorporate patient payments and diversify their revenue collection streams. A diversified revenue stream that includes a robust patient payment strategy can offset the recent disruptions and position practices for recovery. 

Additionally, diversification has long-term benefits. Providers know their healthcare landscape is always in flux, with changes in insurance policies and reimbursements happening all the time. Diversification enables providers with the dexterity to adjust and reposition. 

When healthcare organizations are financially stable, the benefits extend far beyond the bottom line. A financially secure practice can invest in its staff, technology, and patient experience, ultimately leading to better care and greater efficiency in care settings. 

Here’s how to diversify into more patient payment collections: 

Step 1: Audit The Accounts Receivable Process

The first step for a practice is to conduct a thorough audit of existing collection processes. This self-evaluation is crucial for identifying areas that can be streamlined and improved. Here’s what to consider: 

  • Identify bottlenecks that could or are contributing to delays in sending out bills. Determine if patients have difficulty understanding their statements. Pinpoint areas where the process can be streamlined. What manual tasks can be automated? Is there unnecessary complexity in the billing structure? Analyzing these pain points allows for targeted efforts that provide maximum impact.
  • Evaluate the collection methods currently being used. It is reported that 85% of patients prefer text to email or phone therefore relying solely on paper statements and phone calls yields a notoriously low success rate. Instead, adopt more modern options like text-to-pay and automated reminders, which boast significantly higher success rates Providers should consider the patient experience as well – paper statements can be easily lost or forgotten, while phone calls can be disruptive. Modern options offer a more convenient and efficient way for patients to manage their bills. 
  • Analyze how the patient can pay. Debit and credit cards, card-on-file, and online payments create greater flexibility for the patient. Providing patients with convenient options encourages faster and more efficient collections. Cash and checks are becoming increasingly less common. By offering a variety of digital payment options, practices cater to a wider range of patient preferences and expedite the collection process. 

Step 2: Embrace Technology for a Modern Approach

Text-to-pay, rapidly rising in popularity in healthcare, offers patients the ability to settle their bills with a simple tap on their phone. This payment option sends patients a secure text message with a payment link, allowing them to instantly pay their bill from their smartphone. The benefits of text-to-pay are tenfold. Boasting a high open rate, it encourages prompt payments, reducing outstanding balances and boosting cash flow. Today, nearly two-thirds of patients report a preference to pay healthcare bills via this convenient text.

Additionally, online payments offer the functionality for patients to pay outstanding balances. Online payment options are convenient for patients and offer advantages for office staff by reducing the number of incoming calls about statements or payments. Patients can access the information they need readily, freeing up staff to focus on other tasks. Furthermore, if patients can establish payment plans or opt to pay balances over time, this will lead t to increased satisfaction and a more positive overall experience. 

Step 3: Empower Staff to Encourage Patient Payments

The staff plays a crucial role in the patient payment process and empowering them with the right tools and approach can significantly impact success. Practices that invest in training staff members on effective communication strategies regarding billing and financial options ensure they are well-equipped to navigate patient interactions. This training should cover: 

  • Staff should be trained to provide clear and concise explanations of charges. It’s important to empower staff to explain medical bills in a way that is easy for patients to understand. Avoid medical jargon and technical terms. Break down charges into clear components and be prepared to answer any questions patients may have. 
  • Ensure that the office team understands how and when to communicate about available payment options. Capturing a card on file, ahead of visits, can be a viable way to capture payments. Walk staff through the various payment methods offered including credit cards, debit cards, online portals, payment plans, and patient financing programs. Staff should be able to guide patients towards the most convenient method for them. 
  • Patients may feel anxious or overwhelmed when discussing medical costs. Staff should be trained in techniques and ways to approach billing inquiries with empathy and understanding. As stated above, offering many options for a patient to consider along with a compassionate and helpful demeanor goes a long way in building trust and fostering positive patient interactions. 

By investing in training and fostering a culture of transparency, staff can become advocates for their practice’s financial health. They can play a crucial role in collecting payments efficiently, building trust with patients, and ultimately, contributing to the overall success of the practice. A well-trained and patient-centric staff is the heart of a strong patient payment system.

Building Resilience Through Patient Payments

The recent Change Healthcare outage is going to drive change and has exposed the vulnerability of systemic dependencies and the need for diversification to remediate risk. 

Providers can build a financially secure practice, resilient against external disruptions, and dedicated to delivering the exceptional care patients deserve. In today’s ever-changing healthcare landscape, prioritizing patient payments is no longer an option – it’s the cornerstone of a thriving practice. 

Peluso copy
Mike Peluso
Chief Technology Officer at Rectangle Health

Mike Peluso is a career-long revenue cycle professional with advanced skills and expertise in the specification, development, and implementation of software technologies. Mike leads the design of solutions that accelerate the revenue cycle for health plans and healthcare providers ranging from small practices up to large regional enterprises. Prior to joining Rectangle Health in 2013, he also held senior leadership roles with multiple revenue cycle technology companies.

Mike’s portfolio of accomplishments includes the establishment of the Rectangle Health Enterprise Solutions division that serves health plans, hospitals, and large multi-site physician groups by providing unique and customized patient engagement and payment solutions. He also migrated the patented Practice Management Bridge technology to a secure cloud-based platform that supports pre-authorized healthcare processes and the latest chip-technology (EMV) credit and debit cards.

Mike holds a bachelor’s degree in Health Systems Management from the University of Connecticut and has completed graduate-level work in healthcare management with the same institution.