Impact of the Pandemic Year Calls for New Approaches to Patient Payment

Mark Spinner

Americans are more than a year into living with the COVID-19 pandemic, and while relief in sight, the impact of 2020 on consumer economic sentiment lingers. For hospitals, it’s time to rethink the patient financial experience in 2021, starting with financial communications and options for payment.

The start of 2021 brought a reset on patient deductibles—always a tough adjustment for consumers, given that nearly one-third of covered workers are enrolled in high-deductible plans. In 2020, the average deductible for individual coverage totaled $4,364; for family coverage, it’s $8,439.

But the COVID-19 pandemic intensified the financial squeeze consumers typically face when it comes to healthcare expenses at the start of the year. A McKinsey survey shows four in 10 consumers do not believe their finances will return to normal until late 2021 or early 2022; as a result, 40% will decrease discretionary spending.

Meanwhile, an AccessOne consumer survey indicates two-thirds of Americans fear they will be unable to afford medical expenses in 2021. The impact of economic strain on consumer healthcare purchasing decisions runs deep:

Six in 10 U.S. adults delayed or avoided care in 2020—including urgent or emergency care and routine care.

Two-thirds of those surveyed say they would shop around for the best price for medical care, and nearly half have delayed care due to concerns related to cost.

Half of consumers are likely to switch healthcare providers for access to 0% or low-interest payment plans—up from two in five consumers in 2019.

These are pressures that demand attention from healthcare revenue cycle teams. Unless providers address these concerns early in the patient encounter, they will be less likely to retain business or engage patients in medical payment. For healthcare services where demand remains soft, developing a patient-centric model for financial discussions also could make a tremendous difference in volumes.

Resolve to revamp financial engagement. With so much at stake—including patients’ perception of their ability to access care—how should hospital revenue cycle teams revamp financial engagement in 2021? Here are three approaches to consider.

Cultivate a culture of open communication. The AccessOne survey indicates about half of consumers want to discuss payment plans or financing before care is delivered, including 59% of families with children. Yet 55% of survey respondents say they haven’t had these discussions with their providers since the pandemic began. The risk to hospitals: Two-in-three consumers would shop around for care based on price—and 38% already have done so. By proactively initiating discussions on out-of-pocket costs or payment options at the start of the encounter, providers can ensure a more transparent and flexible approach, giving them an edge over competitors.

With the new price transparency rule now in effect, it’s time to go beyond compliance and help consumers to make educated healthcare purchasing decisions. Make it easy for consumers to find your charge list—and provide convenient ways for individuals to contact your organization to find out how much they can expect to pay out of pocket. At Atrium Health in Charlotte, N.C., a proactive model for patient financial discussions has led to a 67% decrease in customer service response times, an 8% reduction in bad debt and a 52% increase in payment plan participation.

Discuss payment options with patients before delivering care. Share out-of-pocket costs with patients before procedures are scheduled, including when individuals seek price estimates for care. Then, walk patients through the range of payment plans available, from no-interest to low-interest plans, and offer to enroll the patient at the point of contact. This results in fewer instances of delayed care and no-shows. It also boosts cash recoveries—especially critical given that point-of-service collections decreased during the pandemic and claims took five to 10 times longer to reimburse.

In times of financial duress, consumers need to know how much they can expect to pay for care—the sooner, the better. Addressing self-pay balances with an emphasis on transparency eases patients’ financial concerns. It also enables them to continue to seek necessary care without delay.

Focus on flexibility of payment options. Following the coronavirus outbreak, 43% of providers experienced an uptick in financing requests following the COVID-19 pandemic. Meanwhile, half of consumers are likely to switch healthcare providers for zero-interest or low-interest financing, including 68% of families with children. Offering a variety of payment options—including zero-interest and no-interest financing—enables patients to pay with dignity, no matter their financial circumstance. It also provides peace of mind for consumers in a turbulent economic environment. At University of Kansas Health System, which offers multiple options for patient payment, 91% of UKHS patients are current with their payments, and the health system’s recourse rate for payment plans is lower than 10%.

It’s important to note that interest in financing options isn’t limited to lower-income consumers. In fact, 63% of individuals who make $100,000 per year or more are likely to switch providers for no-interest or low-interest financing, more than any other income category. 

Delivering Financial Care with Compassion

The financial outlook for consumers as well as hospitals remains uncertain. Moody’s Investors Service predicts a negative outlook for not-for-profit hospitals in 2021, due in part to major cash flow constraints. Hospital volumes are still down 10% below pre-COVID-19 levels; when patients do return for care, their health conditions may have worsened, and some may be ill-prepared, financially, to cover the cost of more intensive care. As the effects of the pandemic continue to be felt, developing a compassionate, patient-centric approach to patient financial engagement will help patients access the care they need while strengthening hospitals’ financial recovery in the year ahead.

Author Information

Mark Spinner is president and CEO, AccessOne, a leading provider of flexible, co-branded patient financing solutions that help patients afford medical expenses for health systems nationwide.