The healthcare industry is in transition. Gone are the days when we’d treat a patient, send a claim to an insurance company or Medicare/Medicaid for adjudication, and then receive a payment quickly. Patients are now the third largest payer for healthcare services, and with that increased responsibility they bring new expectations.
It is, you might say, a new ball game. And as in any game, there will be winners and losers. In this series, we will take a hard look at the current state of healthcare finance, how the game is changing, new players coming to the field, and new strategies providers can use to not only survive, but to win.
Patient financial responsibility has increased significantly over the past several years, and this trend shows no sign of slowing down. A growing number of patients now expect to engage with their healthcare providers online or using their smart phones. The impacts of higher deductibles, copays and premiums over the past decade have left some patients unable or unwilling to pay their healthcare bills.
These and other factors are driving a shift in how we as healthcare leaders must view and meet the needs of our patients. Because patients bear a larger load of their healthcare costs, they are becoming more selective about what kind of care they seek, and where they go to get it. In other words, patients are beginning to think more like consumers, and healthcare providers that neglect to treat them as such will lose them to competitors that do.
Drive to Consumerism
As patients have watched their out-of-pocket costs for medical care grow, many of them have gotten pickier about how they choose to spend their money (or whether to spend money at all). Though consumer confidence is high and many families have every intention of paying their bills, almost two-thirds of Americans do not have enough savings to cover an unexpected $1,000 medical expense. This leads to almost two-thirds of them not paying their bills in full.
This lack of savings means many patients are more likely to ask for estimates before they receive care, and then compare costs for procedures at different facilities. When costs are equal, they are more likely to choose a provider that offers financing options and convenient ways to pay.
Patient-consumers increasingly have high-tech expectations about how they interact with their healthcare providers. Nearly 70% of patients want to pay their medical bills online. Almost half of patients surveyed said they would switch providers if given the ability to pay online.
Disruption and Consolidation
This shift from patients to consumers has left the healthcare industry ripe for disruption, which has brought new players to the game and a few strange bedfellows.
When you think of healthcare, the names Amazon, Berkshire Hathaway, and JP Morgan don’t typically come to mind. But those companies have joined forces to find new solutions for a frustrating healthcare marketplace. CVS recently acquired Aetna in the interest of creating a more consumer-friendly patient experience in a retail setting. And every day, it seems, we hear of another hospital shutting down or two or more health systems consolidating.
As patients behave like consumers and behemoths from other industries eager to innovate a troubled system, it seems increasingly likely we will see an industry shift similar to what happened in the financial sector in the early 2000s. Not all providers will survive this evolution.
But there is reason for hope. In parts two and three of this series, we will discuss strategies to safeguard your organization against extinction. In part four, we will take a look at how embracing this new mindset can lead to financial transformation and success.