Payments for health care is a fascinating corner of the payments industry. It touches nearly every functional segment of this industry including financial institutions, acquirers, processors, ISVs, fintechs, hardware providers, card issuers, and sadly collection agencies among other entities. And it’s big. Health care payments encompass approximately 18% of the U.S GDP.
Despite best efforts, the complexity of these payments has not gotten much better in the last decade. Another way to look at it is that there is still opportunity to create a more efficient system. An article in Modern Healthcare makes some predictions on where healthcare payments go next in 2021 with an emphasis on digital technology including telehealth, transparency around pricing and real-time payments:
Going into 2021, uncertainty still looms but one thing is for certain: technology will continue to transform the healthcare landscape. Looking specifically at the financial aspects of care, we’ll see more providers embrace technology that frees them from the administrative burden associated with billing and payments.
For the many healthcare providers still facing significant financial difficulties, 2021 will be a sink-or-swim year. Those who adopt and leverage modern technology, such as systems that enable telehealth, will be better poised to succeed in the months and years to come. To bolster their competitive edge, I expect to see providers focusing on improving their telehealth offerings—including finding ways to better integrate them with payments and revenue cycle technology—to offer a more convenient digital experience for patients.
As patients take on an increasing amount of the financial responsibility for healthcare, they are becoming more discerning shoppers and expect more convenience from their healthcare experience. This includes a demand for greater predictability and transparency around prices and billing. America’s system of paying for healthcare has long remained complex and opaque. Amidst this complexity, providers and patients bear the burden and risk. Providers want and deserve clarity around payment for health services they have performed.
Technologies that streamline and modernize payment infrastructures have made a major impact within banking and financial services to shore up back-end operations, digitize analog processes and provide better customer experiences. The healthcare industry is primed for this exact transformation, and I expect we’ll see an immense shift in how providers get paid.
Today, it takes more than 30 days on average for a provider to receive payment for their services due to complexities inherent in today’s reimbursement models. This makes it difficult for providers to predict cash flow. The slow and inefficient process of submitting a claim, waiting for the claim to be adjudicated by the payer and potentially facing denials that need intervention, wastes significant time and resources. Along with this lag, uncertainty around exactly how much will be collected from both the payer and patient only adds to the financial and administrative woes providers face.
Overview by Sarah Grotta, Director, Merchant Services at Mercator Advisory Group