The Patient Will Pay You Now: How Medical Practices Can Improve Payment Systems

By Michelle Dowling

Medical practices across the nation are struggling to collect payments. According to a 2019 report from TSYS, a leading global payments provider, 22 percent of physician offices surveyed reported that 10 percent or more of all patient accounts go to bad debt. More than half of these offices expect bad debt recovery to take three months or longer.

Patients may begrudge their doctor for not having the latest payments technology. Understandably, physicians are focused on their craft, which is to help people to get and stay well. But it’s precisely because doctors need to keep patients at the center of their practices that payment systems are important. The easier it is for physicians and their staff to collect payments, the more time and effort they can spend serving patients.  

The healthcare industry needs to rethink its payment practices, and this change should begin at the practice level.  

Why medical practices are struggling with payments

Many factors are causing medical offices to struggle with their payment systems and processes. Paper statements is one of them. A 2018 study from Waystar and HIMSS Analytics found that 96.3 percent of more than 900 healthcare executives surveyed said they bill patients using paper statements. However, the same study found that only 55 percent of patients wanted to receive their bills this way. This process is inefficient and costly. According to PricewaterhouseCoopers, the average organization spends about $20 in labor to file a single paper document. The administrative cost of paper statements is significant and represents a major opportunity for improvement, if the system can be avoided or scaled back. 

Medical practices should also look for ways to simplify the patient experience. The healthcare insurance system in the United States is complex, and few consumers understand how they are billed for the various medical services they use. Depending on the medical practice and the preferred insurance program, patients can be left with varying out-of-pocket expenses that can reach tens of thousands of dollars. 

When the bill arrives, patients typically get a statement for the various services they received, but with little or no explanation. Deciphering the bill can slow down the collections process if patients delay payment until they call the doctor’s office or insurance company to ask for an explanation. This creates friction which in turn slows down collections and increases administrative costs. 

Many people will also get multiple bills. For example, one bill might be sent by a company for blood work while another comes directly from the physician’s office. Invoices for hospital stays can result in half a dozen bills from different specialists, leaving patients wondering when the proverbial financial bleeding will stop. 

This web of complexity often plays out at the practice level. When patients delay or avoid paying their bills, individual medical practices take the hit.

How physician offices can optimize their payment systems

It won’t surprise readers of this article that there is no silver bullet to the collections crisis. However, there are steps medical practices can take to streamline their processes so it’s easier for patients to review invoices and pay in a way that works best for them and their financial situation.     

1. Make payments easier for the digitally savvy  

Efficient payment systems are built around the desires and expectations of today’s digitally savvy patient. At its most basic level, this means allowing patients to pay their bills online and/or via mobile phone. This may seem like table stakes, but many medical offices do not offer the latest payment technologies.  

Online payment acceptance enables patients to pay at their convenience, which is proven to improve collections. Fifty-four percent of patients make a payment online within 48 hours of receiving a reminder, according to TSYS’ report.  

A card-on-file system is another solution that can help practices speed up collections. By storing credit card information with the patient’s permission to charge it for amounts due, medical offices can avoid the paperwork and manpower involved in reminding people about payment due dates and overdue balances. The TSYS Healthcare Report details one medical practice in Illinois that boosted payment collections and reduced accounts receivable by 28 percent in six months by using a card-on-file system. 

2. Up your patient communications game 

Improving communication with patients is another area that can make a difference. This can be achieved in a number of ways, but text and email notifications rank among the best ways to stay connected. Eighty percent of patients said they preferred text or email reminders instead of phone calls and voicemails when being contacted about a bill, according to a Hanover Research study.

Text and email notifications may feel intrusive to practices that have not utilized them in the past, but they actually represent an important way to personalize communication with patients and make payments more convenient than ever. For example, a link to an online payments portal can be included in a text message notification, enabling patients to pay on the go while at the office or running errands. Consumers have come to expect this from other businesses with which they interact, and they will appreciate this level of personalization with their doctor, too.   

3. Invest in your staff

Like the doctors and nurses at a medical office, the staff are only as effective as their training has prepared them to be. A practice might operate top-of-the-line payment systems, but if those in charge of billing aren’t properly trained, inefficiency will persist. 

Staff should know about all the payment options available and make suggestions that are in the best interest of the patient and the practice. Setting up an ongoing payment plan using a card-on-file program, for example, is an effective way to collect payments from an individual who might not otherwise pay. Staff should be ready to suggest this option if somebody doesn’t have the resources to pay a balance in full. 

The future of healthcare innovation

Consolidation in the healthcare industry is already driving innovation. Big technology companies are using their expertise to offer solutions that reduce costs while improving care, goals that are easier to achieve in large healthcare systems. Automated check-in kiosks and digital doctor-on-demand services will likely proliferate as technologies are refined, platforms are built, and investment dollars are raised. All of this innovation will make digital payment solutions more important within medical environments. 

Forward-looking medical practices won’t wait for technology to change them. Instead, they will start looking for an edge now in order to improve collections, cash flow and their bottom lines. Doing that is not only good for the doctors, but helpful to patients who desire more payment options and attentive medical staff who aren’t distracted by administrative tasks.

Michelle Dowling is the director of account management for TSYS’ Health Division, Merchant Solutions 

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