Ways to align financial performance and the patient experience

Higher deductibles, rising premiums and stricter Medicaid eligibility criteria are forcing patients to shoulder a higher proportion of their healthcare costs. As patient balances continue to climb, revenue cycle leaders are realizing that their financial systems and strategies were not built to support this growing burden.

In response, financial leaders are actively reassessing their priorities. The number of health systems ranking patient balances as their single highest priority nearly doubled over the past year, according to a recent survey conducted by HFMA with PayZen.^a

At the same time, industry-wide focus on improving the patient financial experience more than doubled as well, signaling that leaders are just as focused on the patient journey as they are on revenue cycle efficiency.

“Health systems are under a lot of financial pressure right now. Operating margins are already thin, and they’re anticipating larger patient balances because of the changes in the One Big Beautiful Bill Act,” said Tobias Mezger, PayZen’s co-founder and chief revenue officer. “Revenue cycle leaders are looking for solutions that offer both a positive patient experience impact and a near-term cash impact, as well.”

The recent survey results reveal where the most significant gaps for addressing patient financial responsibility remain. They also point to the ways in which health systems are recalibrating their approach to better serve both patients and the bottom line.

Prioritizing patient balances

Nearly all revenue cycle leaders (91.1%) ranked patient balances as a top strategic priority this year, up from 73% last year, according to the finding of HFMA and PayZen research. Notably, the share of leaders ranking patient balances as their highest priority nearly doubled, from 11.4% in 2025 to 21.9% in 2026.

Patient balances command more attention today because they account for a growing portion of health system revenue, representing 12% of net patient revenue, on average. Yet health systems only collect 31% of patient billings on average, reflecting the challenge of converting patient responsibility into revenue.

“That rate will never reach 100%,” Mezger said. “But it can be improved by giving patients a variety of payment options and discussing them earlier in the process.”

In response, health systems are realigning their priorities to meet these needs, with a focus on the patient experience more than doubling, from 18.5% in 2025 to 41.3% in 2026, survey results indicate. Increasing patient collections remains the top priority for 48.7% of health systems, while improving the patient financial experience (41.3%) and reducing bad debt (40.7%) ranked second and third, respectively. Four out of 10 have skipped or delayed care because of cost — underscoring the need for greater financial support, according to the report.

As patient financial responsibility grows, helping patients manage out-of-pocket costs has become increasingly important to both care access and financial performance.

Falling short of financial needs

Despite this renewed focus on the patient financial experience, many health systems still rely on legacy payment plans that Mezger said typically fail to meet patients’ financial needs. At that rate, it would take more than five years to pay off a $5,000 balance. The average patient can realistically pay $82 per month in medical bills.

However, nearly 60% of health systems cap their in-house payment plans at 24 months or less, and half of these systems (30.5%) cap their plans at 12 months or less. Only 16% offer terms greater than 36 months, and 16% of smaller health systems (under $1 billion in revenue) do not offer any in-house payment plans at all — leaving patients to manage large balances alone.

These structural shortcomings unintentionally exacerbate the financial pressures facing patients, making it even more difficult for systems to collect on balances due, Mezger said. With nearly a quarter of all patient collections tied up in payment plans (23%), a significant chunk of revenue remains at risk, severely limiting cash flow for health systems.

This glaring misalignment “virtually guarantees higher default rates,” according to the report. Unfortunately, a lack of visibility keeps health systems from understanding the true impact on their bottom line. A staggering 72.2% of revenue cycle leaders admit they don’t know their average default rate for in-house payment plans longer than 12 months.

Among the minority of respondents who self-report a default rate, the average hovers around 13%, substantially lower than the 20% default rate PayZen uncovered in its own evaluations. This discrepancy suggests that “organizations may be underestimating their internal risk by more than 50%,” according to the report.

“Standard in-house plans are not tailored to a patient’s ability to pay, and they’re not using the latest servicing technology to keep the patient on track with their payments,” Mezger said. “As a result, health systems are leaving money on the table.”

To make matters worse, “They don’t even have clear visibility into this issue because the EHR [electronic health record] isn’t set up to report properly on payment plans,” he said. “Every time there’s a balance change, the EHR resets the payment plan, so you lose the balance history. The solution is having better data, but it takes a lot of work to get the correct data from your EHR.”

To overcome these structural limitations, more health systems are turning to third-party patient financing vendors to bolster their payment plan options. While most health systems (56.2%) continue to bear the risk and administrative burden of patient balances on their own, 43.8% of systems now partner with a third-party financing vendor, a 15-percentage-point increase over last year. Cash acceleration is the primary driver behind this decision, nearly 36% of survey respondents indicated.

“Health systems are realizing that patient balances are increasing and they’re leaving money on the table,” Mezger said. “Third-party financing isn’t just providing cash acceleration for health systems; it’s also providing a better solution for ​patients.”

Engaging patients earlier

The adoption of pre-service ​payment policies is now nearly universal, with 91.5% of organizations either encouraging payment, requiring payment or collecting a payment method during the estimate process, compared with 81.3% last year.

Despite this increase, pre-service collection rates continue to lag at an average of 21% of total collections, a modest increase from 16% last year. The​ report blames “the fundamental tension between financial enforcement and the clinical mission,” where strict upfront payment requirements may inadvertently discourage patients from seeking care. Among the 17% of organizations that state that they require upfront payment, 68% still provide care even if the requirement is not met.

On average, health systems with pre-service payment policies collect 5.08% of patient billings before care is delivered, more than double the 2.42% collected by systems without a policy. What’s striking is that the type of collection policy doesn’t seem to matter. Systems that simply “encourage” pre-service payment collect 5.05%, nearly identical to those that “require” it, at 4.3%. The data suggests that a more supportive approach may be just as effective as a rigid policy, with far less risk of pushing patients away if they cannot pay in advance.

While most health systems screen for Medicaid eligibility or financial assistance availability after scheduling an appointment, the survey signaled a clear desire to move this interaction earlier, as 61.3% of leaders believe screening should happen at the time of scheduling, yet only 21.1% do. Conversely, 26.5% of organizations currently screen at the time of the visit, but only 3.6% believe this should remain the standard.

“The ideal experience is to have a conversation about the patient’s out-of-pocket costs prior to the visit and to offer flexible payment options as early in the process as possible,” Mezger said. “What’s preventing this proactive timing is change management. Oftentimes, pre-service financial screening is owned by disjointed teams, and the data isn’t readily available to them. The health systems that do this well have done a lot of work to define the ideal workflow and make sure these teams are all working together with access to the data they need.”

Applying AI to revenue cycle

Traditionally, many of these patient balance touchpoints and pre-service conversations required human resources.

“This is all headcount intensive,” Mezger said, “and with the Medicaid changes that are coming, if you want to have more upfront conversations around patient balances, you’d need more resources, and these resources are hard to hire.”

This is where AI shows great potential to augment the revenue cycle by alleviating some of the administrative burden.

“You simply can’t hire those people fast enough, and many health systems don’t have the budget to grow their teams,” he said. “This is a very natural use case and a big opportunity to use AI for a lot of these workflows.”

More than one in three health systems (36.9%) are already using generative AI in their revenue cycle, and the majority (84.7%) of those not yet using AI say they’re interested in adopting it. However, implementation rates and applications vary depending on the size of the organization.

Across the industry, denials and appeals represent the most common use case for generative AI within the revenue cycle. Overall, 45% of health systems report using AI for denial-related workflows.

Smaller organizations, in particular, are more than twice as likely to prioritize AI for denials and appeals, with 70% reporting this use case compared with 30% of large systems. Other AI applications within smaller organizations include coding support and clinical documentation improvement (60%), reflecting a focus on reducing the administrative burden surrounding back-office revenue cycle workflows.

Larger health systems, on the other hand, report a more distributed set of AI use cases beyond denials. These extend into patient-facing workflows, including prior authorization (20%), patient access and scheduling (20%) and eligibility and financial assistance (20%) — highlighting a broader strategy to streamline front-end processes while enhancing patient engagement.

“Obviously, when you’re dealing with protected health information, there’s a lot at stake to get this right,” Mezger said. “But at the same time, you can’t just sit back and do nothing. It’s important to embrace AI, but you have to be smart about it.”

Emerging models for patient financial engagement

As out-of-pocket costs continue to rise and as margins shrink, these shifts are forcing health systems to redesign their strategies to provide a better patient financial experience while improving financial performance. Across different priorities, processes and workflows, this research highlights the most effective approaches for managing the rising costs of care.

By offering pre-service payment options and upfront financial assistance through a combination of in-house plans and third-party vendors, health systems can move beyond reactive billing toward proactive patient engagement. Meanwhile, generative AI can scale these efforts, enabling more efficient operations and personalized patient experiences across the revenue cycle.

Health systems that stay ahead of these trends will be positioned to increase collections and reduce bad debt while ensuring that patients can access the care they need, Mezger said. “Working with the right partners helps position organizations to succeed in this space,” Mezger said. “Find the vendors that are technology-driven. Forward-thinking partners can be a catalyst for change on your journey to innovating the patient
financial experience.”

PayZen is the AI healthcare affordability platform making care accessible for patients and sustainable for health systems. With the most comprehensive AI data platform and a patient-first mindset, PayZen delivers custom payment options tailored to the individual, helping patients afford the care they need while improving financial outcomes for providers. Recognized by KLAS Research as the top vendor in the space, PayZen is backed by leading investors and led by experienced technology leaders with a proven track record of helping millions of Americans overcome financial challenges. Learn more at payzen.com.

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Survey data point to challenges with patient collections

Healthcare leaders surveyed by PayZen and HFMA indicated:

• Patient billings represent 12% of net patient revenue for health systems, on average.
• Yet these organizations collect just 31% of patient billings.
• The proportion of leaders who ranked patient balances as their highest priority nearly doubled year over year:
  • 2025: 11.4%
  • 2026: 21.9%
• During this period, interest in improving the patient financial experience more than doubled:
  • 2025: 18.5%
  • 2026: 41.3%

Source: HFMA survey in partnership with PayZen, 2026

Data points to challenges with payment plans and eligibility processes

• Seven out of 10 health system leaders don’t know their organization’s default rate on in-house payment plans.
• More than four out of 10 health systems work with a third-party financing vendor, a 15% year-over-year increase.
• Six out of 10 leaders say their organizations want to screen for Medicaid and financial eligibility at scheduling, but only one in five health systems surveyed do so today.

Source: HFMA survey in partnership with PayZen, 2026

About PayZen

PayZen is the AI healthcare affordability platform making care accessible for patients and sustainable for health systems. With the most comprehensive AI data platform and a patient-first mindset, PayZen delivers custom payment options tailored to the individual, helping patients afford the care they need while improving financial outcomes for providers. Recognized by KLAS Research as the top vendor in the space, PayZen is backed by leading investors and led by experienced technology leaders with a proven track record of helping millions of Americans overcome financial challenges. Learn more at payzen.com.

_{This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA}.

Footnotes

a. State of Healthcare Affordability: The Patient Perspective report, PayZen, July 15, 2026.