Patients as Payers: An Analysis of Current Trends
As patients cope with higher premiums and rising deductibles, providers face the challenge of managing a greater amount of patient accounts receivables (A/R) as a percentage of total revenue. To address this challenge, providers are heavily focused on increasing patient payments while making it as convenient as possible for patients to pay. But how are we really doing? Is the focus on collecting at point of service (POS) working? Which payment methods are growing in popularity with patients? Where should future efforts be invested?
To answer these questions, ZirMed analyzed three years of patient payment data to look at the trends.
The good news. Overall patient collections are up. The average number of payment transactions per customer increased by 41 percent, and the average dollars collected per customer grew 36 percent, indicating that providers are doing a good job of collecting from patients overall.
The surprising news. Despite the emphasis across the industry on POS collections, POS transactions have declined as a percentage of overall collections. Instead, the big winner has been online post-service payments (i.e., e-commerce), with patient lockbox payments seeing a slight increase as well. And despite increasing patient responsibility, payment plans have held steady as a small percentage of overall transactions. Basically, patients are paying more post-service, despite best practices for collecting at point of service, and they are doing it mainly online.
The downside. The actual dollar value of most individual transactions decreased by 3 percent, potentially indicating that patients are finding it difficult to come up with all the money owed at point of service.
POS collections (e.g., point of service, live operator/phone-based outreach). Over the past three years, POS collections have declined as a percentage of total transactions from 66 percent to 61 percent and total dollars collected have declined from 72 percent to 66 percent. The average transaction amount collected at POS also decreased 5 percent. It is evident from these numbers that the focus on efforts to collect from patients earlier in the revenue cycle needs to continue.
E-commerce collections. While POS collections have declined, e-commerce transactions are on the increase. E-commerce transactions represent 20 percent of total patient payment transactions and 21 percent of the total dollars collected, with an average transaction amount increase of 4 percent. These results indicate that online payments offer a valuable opportunity to capture revenue in a convenient way when patients are ready.
Lockbox payments (e.g., paper check payments converted to an automated clearing house). Lockbox payments—paper checks received by mail—have increased slightly from 13 to 14 percent of total transactions, from 7 to 8 percent of total dollars, and to 5 percent in actual transaction value. Patients who insist on paying by paper check also have higher patient responsibility, most likely because this patient population is either older or of lower income and unable to obtain credit cards. Both populations represent higher healthcare expenses and higher levels of responsibility for those expenses.
Payment plans (e.g., payments made via the patient portal or at POS).Payment plans have held steady at 4 percent of transactions and 3 percent of dollars collected. Interestingly, the average transaction value has decreased by 5 percent, indicating that patients may be struggling to pay their bills and likely need smaller installments over a longer period of time.
Although we are clearly making progress at collecting earlier and more often from patients, it is still important to remember that the financial experience is a big part of the overall patient experience. Providers should continue to politely focus on collecting at POS, but also offer as many options for patients to pay as possible, making the payment experience easy to understand, straightforward, and convenient.