Patients find their specialty and primary care doctors are turning to out-of-network models at a rapid rate. Patients utilizing in-network doctors and facilities are still faced with their insurance plan’s high deductibles, copays and coinsurance. The learning curve is steep and patients are just educating themselves.  NPR and Kaiser Health News “Bill of the Month” article uses actual patient bills to educate their readers on how to be more active in managing their unexpected healthcare costs.  Bills selected run the gamut of circumstance and cost to the patient.

What does this mean to the healthcare industry?  Unfortunately, when increasing amounts of medical cost fall on the patient, the choice of providing care or pursuing payment weighs on all medical providers.  The pursuit of payment is costing an average of 27% of total revenue for physician groups and 21% for hospitals, according to a recent brief by the Center for American Progress.

A patient’s access to care is no longer just limited by geography. Patients are forced to consider the cost of care even for preventative care. The financial affliction associated with a patient’s responsibility for their own care is forcing the healthcare industry at large to rethink the way they attract new patients, keep existing patients and collect on payment.  In this economic and socially shifting environment, it is more important than ever that the industry shift their current collection paradigm to a more customer centric model.

Learning from Other Industries

Mortgages expanded the housing industry making homeownership a possibility for those lacking large amounts of capital at the ready.  Retail credit cards transformed the way people shop and how shoppers engage with retailers.

In 1920, Americans were introduced to the first mass-produced, “affordable” automobile, which left most wondering how they could ever afford to own one by paying upfront. It wasn’t until automobiles were considered a necessity that the idea of buying one on credit truly took off.   Enter auto financing, and less than 10 years later, half of the United States population proudly owned one. By 1930, two-thirds of cars were purchased on credit.

Necessity drives consumerism in all industries: transportation, housing, utilities and now, healthcare.  How can the healthcare industry learn, adjust and make healthcare more attainable and affordable to patients?

The Rise of the Patient Consumer

The annual value of patients’ out-of-pocket medical expenses is estimated at $63.7 billion. Private practice medical doctors and healthcare administrators need to learn from history in order to navigate the financial payment landscape that allows them to offer care to their patients and get paid for their services. There is too much at risk not to conform.

As patients knowingly assume more financial responsibility for their healthcare, they will become more selective about who, where, when and if they will receive their care. The rise of healthcare transparency and surprise billing legislation will give patients new tools to make these decisions that much easier. When patients are armed with the ability to choose where they receive their healthcare based on price, those offering healthcare services will become considerably more proactive in marketing to patients.

The healthcare industry must pivot, analyze and rethink business as usual based on financial circumstance, decision making process and method of communication.  Patients aren’t just shopping for their healthcare, they are shopping for medical doctors and facilities that value their business and prove it to them.   Patients want the ability to pay their medical bills like any other expense today – without hassle and over time.

Payment Plan’s Role in the Patient Decision Process

Consumers want payment choices and use these options as part of their purchase decision. In a recent survey, 93% of patients responding and willing to use payment plans also wanted providers to be proactive in offering such a plan.   In addition, an overwhelming majority of patients (76%) who were offered and used payment plans said they would complete the plan on time.  Consumer-centric patients seek non-predatory payment options as a reason to commit to a doctor’s care plan and see through including payment in full.

With $7.5 billion in medical bills going uncollected each year, what is there to lose?

Consumer-centric patients understand that unfortunately, all payment options are not favorable.  Early players in the medical payment subsection thrived and continue to market as interest free to patients, but fine print tells a different story.  Doctors and facilities should count on patients being aware of these practices, especially with online reviews and social media.  In fact, 24.8% of respondents who used payment plans said that incurring additional fees was the reason they had previously avoided payment plans altogether.

Technology Offers Access to More Consumer Patients

Beginning in the early 1990’s payment plans based on credit score allowed patients to pay for health care with a credit card model with interest rates risk of over 25%, retroactive.  Consumer patients are increasingly more shrewd to the fine print of the predatory payment plans of the past, and are seeking out payment plans that benefit both the patient AND the healthcare facility.

Evolutionary risk assessment technologies can now assess a consumer’s ability to pay using thousands of social, behavioral and financial indices, not just credit score.  By using alternative means to assess risk, non-predatory, truly interest and fee free payment plans are now available to patients with credit as low as 400.  Remarkably, these advancements can successfully lower the barrier of entry for patients while eliminating the burdensome administrative costs associated with traditional payment plans.

With the help of technology, interest and fee-free payment options do exist.   Savvy consumers should beware of predatory impersonators in the form of credit cards and micro-lending “matchmakers.”  Only medical practices and healthcare facilities who invest in the consumer-centric patient relationship will be willing to help patients get the care they seek and the means to make it more affordable. These are the practices and institutions that will thrive in the future healthcare market.

James N. Giordano is CEO and Founder of Care Cap Plus, the technology driven leader in interest-free financing and payment plans.

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