3 Ways Digitization Is Changing Healthcare Payments

by Jeff Coppolo

COVID-19 is far from over, but healthcare providers are beginning to join the transformation in payments.

© ipopba/iStock/Getty Images Plus

After COVID-19 struck the U.S., almost every industry changed its payment and invoicing processes in response. Healthcare, however, had bigger issues to worry about—like treating a novel disease, securing PPE and ventilators, and protecting overworked staff. Meanwhile, financial executives needed to manage a collapse in revenue as patients postponed elective procedures.

COVID-19 is far from over, but healthcare providers are beginning to join the transformation in payments. There is an opportunity for financial executives to reduce administrative costs, accelerate cash flow, and provide a better patient experience.

Much of the pressure comes from patients themselves. A 2019 survey by InstaMed found that 83% of consumers prefer electronic payment methods for medical bills, yet 87% of providers still used paper and manual processes for collections. Healthcare is one of the few holdout industries that mails a bill and expects patients to send back a paper check or share credit card information over the phone. Understandably, 66% of consumers told InstaMed they would consider changing healthcare providers for a better payment experience.

The irony of receiving telemedicine or a high-tech treatment—and then getting a paper bill in the mail—is not lost on patients. In terms of medical innovation, the US healthcare industry leads the world. In terms of payment and checkout experiences, however, healthcare is trailing restaurants and parking lots.

As someone from the payment industry, I want to speak frankly about the financial technologies available to healthcare providers and the trends I have observed around their use and implementation. There are opportunities for providers to streamline payments, automate invoicing, and reduce costs. Let’s cut through the buzz and explore the three dominant trends in healthcare payments. 

  1. Contactless payment methods

In a typical clinic, patients visit a front desk to check in and out. They hand over a credit card or cash for their copayment and receive a paper bill in the mail days later. While the risk of COVID-19 transmission via paper is low, the in-clinic payment process increases the time patients must spend in close proximity to staff and each other. The paper bill also slows down payments and therefore hurts cash flow.

Many clinics are now introducing card not present (CNP) payments, the same type of payment used by eCommerce sites like Amazon. Before or after their visit, the patient can enter credit card information into a digital portal. This information is securely stored in the organization’s database in their portal and can be accessed by the patient via a link in their invoice or bill for an easy payment.

To make payments even easier, clinics may choose to accept CNP payments from digital wallets like Apple Pay, Google Pay, and PayPal. These services store people’s credit card information, so there’s no need for patients to re-enter it into your portal. That increases the odds that patients will pay promptly and feel like the experience was hassle-free.

Clinics that bill expensive procedures to patients may wish to offer ACH payments as well because the fee for receiving an ACH payment is substantially lower than that of accepting cards.  

CNP transactions, digital wallet payments, and ACH are all touch-free and need not be performed inside the clinic. By reducing foot traffic and congestion, these modern payment methods can help you keep staff and patients safer, while offering the modern payment methods patients have come to expect. And by offering an alternative to paper checks or passing card information over the phone, you can speed up payment cycles and tighten your payment security.

  1. Accounts receivable (AR) automation

Today, most healthcare providers have a manual process for invoicing. An AR team uses an ERP system from Oracle, SAP, Sage, etc. to push out invoices one at a time before mailing them. After the patient has paid the invoice by paper check or over the phone, another team in accounting manually keys in the payments and uploads documentation to reconcile them in the ERP system. The process is time-consuming, error-prone, and not at all rewarding for accountants who could be focused on more meaningful analytical work.

To address this inefficiency, healthcare providers are integrating AR automation technology (in addition to contactless payment methods) into their ERP. As the name implies, an AR automation tool automatically generates an invoice and delivers it to the patient via email, text message, or both. The recipient clicks a link to pay by card, digital wallet, ACH, or whichever contactless option the provider allows. Once the invoice is paid digitally, it is automatically reconciled in the ERP system.

The entire invoicing process can happen without any human touch or intervention. If a patient forgets to pay, normally someone in AR or collections would call the patient or mail a series of reminders. Invoice automation systems can be programmed to auto-remind patients about bills before they’re due and send reminders (or notification of late fees) when they’re past due.

When choosing an AR automation platform, it’s important to find one that is built into your payment platform or easily integrated with it. Likewise, the payment and AR automation platforms both need to play nicely with your ERP system.

  1. Vendors with integrated payments

If you use practice management or revenue cycle management software, your vendor (or its competitors) may have begun to accept cards and ACH payments. This is a new trend. Until recently, most providers subscribed to a payment facilitator separately and connected it to their practice management or ERP platform. Now, independent software vendors (ISVs), like your practice management or revenue cycle management platform, are partnering with payment facilitators to provide integrated payments. This approach has advantages both for the ISV and you, their customer.

By integrating payments into their healthcare platforms, ISVs are able to provide additional value to medical practices, offering the ability to make payments easier for patients, seamlessly.

ISVs often integrate payments in thoughtful ways by, for example, building them into the same dashboard patients use to book appointments, review test results, message providers, and so forth. The result is usually a better user experience for patients, lower technology costs for your organization, and faster payment cycles.

Digitization is on the way

Sooner rather than later, contactless payments, AR automation, and integrated payments will be the norm in healthcare. The advantages are obvious. Contactless payments improve patient safety, the customer experience, and credit card security. AR automation can reduce administrative costs, free up time for accounting staff, and offload costly, manual work. Finally, integrated payments may introduce both contactless payments and AR automation into the practice management platforms that healthcare providers already know and trust.

Providers should choose their fintech partners with care. In terms of technology costs and ease of implementation, a practice management platform with integrated payments is usually the best option. Still, it’s possible to connect contactless payments and AR automation into your existing stack.

Either way, your patients want a digital experience and will seek care from providers who offer it. It’s time to meet their expectations.

Jeff Coppolo is a Veteran Strategic Payment Expert at BlueSnap.