Healthcare is one of the fastest growing segments for both technology and payments, as Bhagvan Kommadi points out in this Forbes article. What’s driving the demand for both is a fundamental shift in how we consume healthcare services here in the US. Most of the technology built to manage patient records and payments came to market at a time when the healthcare landscape was dominated by HMOs with nominal patient co-pays. Enterprise systems with hospitals and physician practice groups were designed to exchange billing details with insurance companies, since they paid the entire bill except for the nominal co-pay provided by the patient.
Today’s healthcare has evolved into high-deductible healthcare plans (HDHP), where the patient is now responsible for the first $5k or more of their annual healthcare expenses. This has injected a new variable into the service-to-payment revenue cycle for physicians and hospitals, since a significant share of their revenue is now coming directly from patients, not just from healthcare insurers. This increase in patient billing brought new challenges, as patients now wanted to see billing details to understand what they are paying for. For many patients, healthcare expenses are sudden and unbudgeted, leaving them unable to pay the entire bill in a timely fashion. Revenue cycle companies are learning that platforms that offer installment payment plans as options yield a higher revenue recovery than ones that simply send everything to collections after 90 days.
Solving these issues for both patients and providers has brought a technology focus to transparency, where more of the billing detail is available to consumers, and connectivity, the ability to easily share data throughout the healthcare ecosystem. Patient privacy is paramount in handling treatment details, as set forth by the Healthcare Information Privacy and Portability Act (HIPPA), so access control to patient data requires both robust data security to guard against data theft, as well as user authentication to control who has access to what.
Most of the start-ups in the healthcare space are integration-layer companies focused on building flexible and extensible API platforms that can connect disparate systems. The platforms enable more comprehensive workflows to be constructed that start with patient onboarding at the provider’s office and flow all the way through the procedure cycle to billing and payments.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group