Better billing? Healthcare can learn from other industries

When Michael Rawdan joined Boise, Idaho-based St. Luke's Health System in 2013 as a director in the revenue cycle department, he began by looking for the system for billing and collecting from individual patients.

He was amazed by what he didn't find.

"I had come from banking and finance and credit cards," said Rawdan, now senior director of the department.

"I come here and we have nothing. Zero," he added.

St. Luke's wasn't some industry outlier.

The antiquated paper billing system many hospitals have used for decades was inefficient. It confused patients, who had a hard time knowing what they owed, what they'd paid and what they were being billed for. As a result, patients could be mired in confusion over billing codes and crisscrossing information from insurers and a multitude of providers and often didn't pay their bills.

For providers, it hadn't been a big problem. Their system was built to collect from insurers and the government, which paid the lion's share of most bills.

But more recently, with more patients being pushed into high deductible plans, hospitals are increasingly dependent on collecting those bills. They're also confronting a patient population, schooled in the new electronic consumerism, that is no longer willing to put up with confusing bills with pages of outrageously high charges seemingly unrelated to what they owe.

In an era when patient satisfaction and patient engagement matter, billing has emerged as a major factor driving the lasting impressions that will determine if that person decides to use that provider again.

People with big medical bills, especially younger patients, are often shocked by the system. "Why can't I self-serve? Can you tailor an experience more relevant to me? Why can't I get a consolidated view?" Those are all questions Kent Ivanoff heard when he tested patients' experiences paying bills. Ivanoff is the CEO and founder of payment technology company iVinci, which is working with hospital systems on making it easier for patients to pay.

Patients got those ideas from paying bills in other industries. The lesson from those industries is that a billing system needs to reflect the needs of customers, not the institution or company providing the service.

"Patients are now beginning to expect what they have in the nonhealthcare space," Rawdan said. "This generation of patients now demands a digital presence. And they want to be able to self-serve."

Ivanoff's background included working for companies with expertise in billing. He created several consumer finance startups that were eventually acquired by Capital One.

The financial services industry is an obvious choice for modeling payment systems for hospitals. But merchandisers such as Amazon and Zappos—and even the IRS, which allows taxpayers to go online to pay their tax bills in increments—offer examples for healthcare providers to follow.

Processes that have become standard for billers in other industries include automated payments; statements that include all charges (rather than billing in silos); and the ability to pay on mobile devices.

Most importantly to many patients is the ability to pay over time, since hospital charges are so large, Ivanoff said. That's something credit card companies and retailers figured out years ago.

But there are issues revenue cycle managers and vendors need to look at differently in healthcare. Security is a concern for any online companies that ask for credit card numbers and other identifying information. But it's even more important in healthcare because of federal patient privacy laws.

"We are going to go to any length possible to make sure information is as secure as it can possibly be, and that lengthens the amount of the time it takes for large systems to take advantage of some of this emergent technology," said Todd Craghead, vice president of revenue cycle at Intermountain Healthcare in Salt Lake City, which is using iVinci's VisitPay system.

Care provided by different billing entities is also a problem. If vendors want a seamless system for patients, they have to figure out ways to get multiple providers to be part of the process.

The age of most patients is also an issue. Younger generations are comfortable putting lots of personal and financial information online and navigating the web. But in healthcare, the consumers are generally older, and, in some cases, are less comfortable making online financial transactions.

Yet a survey by one healthcare payments vendor found older consumers also want convenience. A 2015 InstaMed survey of 2,575 insured consumers who paid medical bills that year found 93% of consumers, including those over 55, said they wanted to pay healthcare bills online.

But the industry still lags in adopting online payment technology. InstaMed's 2014 Trends in Healthcare Payments report found 75% of health providers still consistently mail more than one paper statement to collect payments.

The bottom line lesson from other industries is that people will gravitate to firms that make it easier to conduct e-commerce so consumers can do many tasks—including pay bills—online. Amazon has replaced physical stores with home delivery. Banks have replaced tellers with online banking. Travel agents are disappearing.

The takeaway lesson: The easier the experience, the easier it is to part with money. "We need to figure out how to provide the best experience possible," Rawdan of St. Luke's Health said. "A happy patient tends to pay a lot faster than an unhappy patient."