A recent industry conference called Healthcare Consumerism Symposium highlights the rapid change that is happening within the healthcare industry. Increasingly, hospital leaders are acknowledging the importance of the patient experience and their learned behaviors from other industries. That is a lesson CFOs can often be late to embrace, but one that I came to realize over the arc of my healthcare career.
As the CFO of major systems up and down the West Coast, I embraced a number of different challenges over my 40+ years. But the goal was always the same: maximize revenue. For most CFOs, that means a focus on numbers and working primarily to grow reimbursements from intermediaries such as insurance companies and Medicare. Today, the size of those reimbursements is increasingly tied to patient satisfaction scores.
And that change is driving a new opportunity to positively impact a hospital’s bottom line by meeting the needs of patients as consumers. That satisfaction overlaps with a CFO’s domain when you consider that patient impressions of billing often drive their overall review of a hospital experience. Improving the patient billing and payments experience then holds a tremendous opportunity for growing revenue.
"Paying attention to patient satisfaction turned out to be a winning strategy - patients are willing to pay if they understand the bill"
The portion patients pay after insurance is a small piece of the overall revenue pie – roughly about 5 percent. But this is still significant, especially when you consider a revenue stream in the hundreds of millions annually. But despite research showing that most patients are happy to pay their bills, collecting from patients is not something most hospitals are good at doing. They simply do not have the right tools and processes to manage a large volume of small receivables.
The result is that most patients don’t understand their bills, and because they don’t understand them, they don’t pay them. Added to that, out-of-pocket expenses are higher than ever with the rise of high-deductible health plans, and patients may not have the ability to pay. In addition, patients, as consumers, expect convenience, which in today’s world means the ability to pay bills online.
Most hospitals mail notices and field phone calls, both of which add to the cost of collections. And by outsourcing the follow-up collection, a system pays a hefty premium. Even then, many still write off a large portion of unpaid patient balances. The traditional process is clearly inefficient and costly.
Fortunately, a number of new technologies and approaches are emerging that help deliver that premier consumer experience for healthcare billing. One example that I deployed at a prior employer to address this patient payment and satisfaction gap is Simplee. Their solution combines physician and hospital billing to deliver one, easy-to-understand bill that clearly shows patients what they owe. The paper bill links to an online payment portal, which patients can access from a desktop computer or mobile device. This empowers patients to complete their transactions digitally, anytime, anywhere, from any device. They can set up their own payment plans online and establish monthly payments they can afford. It’s in a hospital’s best interest to facilitate that option–getting paid over time is better than not getting paid at all.
At the end of each online transaction patients can rate and comment on their experience. What surprised me was that the scores and the feedback were so positive. Patients were delighted, and that’s something you don’t usually hear when it comes to paying hospital bills.
My initial motivation for adopting a new payment technology solution was to improve patient satisfaction, and we accomplished that. But we also realized gains in unexpected areas. We collected more from patients and saved on staffing, postage, and collection fees. It was a win-win; not only did patients prefer digital engagement, but email and SMS bill notifications were cost effective drivers of payment. The financial pay-off was 4-5 times the investment–a formula that any hospital CFO will embrace.
Paying attention to patient satisfaction turned out to be a winning strategy - patients are willing to pay if they understand the bill. And if you make it easy for them, they will pay. In return, the hospital can grow its bottom line and satisfaction scores at the same time.
In thinking about this experience, I wonder if improving patient experience in other dimensions of healthcare could be the key to unlocking even greater hospital financial success? Patients today are empowered, and to remain competitive, health systems may need to consider cutting edge tools in transparency, scheduling, tele-health and more.
Hospital financial performance in the future will depend not only on the quality of clinical care, but on patient experience and satisfaction with access, information, and convenience.