Hospitals turn to fintech as reliance on patient out-of-pocket spending grows

Patients have long been frustrated by the administrative and billing hassles that follow medical treatment. Hospitals increasingly recognize the negative effects this has on their reputations and are testing new ways to make it easier for patients to pay and for providers to get paid.

Providers have started to think more about consumerism and patient experience. “We didn’t use that terminology in healthcare 20 years ago. Everything in health systems was all about clinical outcomes,” said Motti Edelstein, vice president of revenue cycle management for Allina Health, a not-for-profit health system based in Minneapolis.

This is driving more hospitals and health systems to partner with financial technology—or fintech—companies to ease patient billing both pre- and post-service, said Jonathan Lo, Deloitte Consulting’s global revenue management leader. “It’s a huge shift in mindset for health systems,” he said.

Vendors such as AccessOne, Cedar, Patientco, PayZen and VisitPay have emerged as partners to hospitals seeking the twin benefits of happier patients and better revenue collection.

Read more: Keys to a successful fintech implementation

Consumers are used to seamless transactions in their everyday lives when interacting with other industries, such as banking, retail and hospitality, and expect frictionless and flexible ways to pay bills. The healthcare business is finally starting to catch up. “We’re behind everybody else,” Edelstein said. “If a patient is used to ordering and paying with their iPhone, we want to be there.”

The interest in fintech vendors stems from broader trends in U.S. healthcare. Health insurance policies require patients to shoulder a greater and greater share of medical expenses out of pocket. The government is pushing price transparency and curbing surprise bills.

The growing out-of-pocket burden that patients face also affects providers, which now have to collect a greater portion of their reimbursements directly from patients. “It’s just like another payer,” said Anthony Cunningham, vice president of patient financial services at Atrium Health Wake Forest Baptist.

Easy payments = more payments

That’s where financial technology comes in. Fintech companies are trying to help providers improve communication and education before patients receive care, ensuring that they understand their financial obligations ahead of time and making it easier for them to submit their copayments, coinsurance or outstanding balances. Some vendors offer solutions built into a health system’s existing patient portal, while others rely on separate apps, Lo said. Many providers blend the two.

These startups are also easing billing for patients after they receive care by streamlining the process, helping providers collect more of the money that patients owe them. Patients are more likely to pay a bill when they’re expecting it. “Don’t wait until it’s bad debt because by then, it’s too late,” Edelstein said.

Allina Health recently partnered with Cedar, a patient engagement and payment startup, to make it easier for their patients to understand how much they owe and to pay bills.

Under traditional billing, patients can receive a plethora of statements for every discrete service, such as doctor’s visits, lab services or X-rays, each of which is subject to varying levels of cost sharing. Using Cedar’s software, Allina bills the insurer first, then sends patients a single invoice. “Now, they’ve got all their bills in one place and the ability to click and pay all of them at the same time,” Edelstein said.

This platform can also help providers navigate price transparency and surprise billing laws. Allina will eventually use Cedar’s technology to tell patients what it expects them to owe when they schedule an appointment instead of waiting to share out-of-pocket cost information with them after providing care.

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For instance, if a patient schedules an imaging service, Allina will get pre-authorization from the patient’s insurer before their appointment and email or text them an estimate of their cost sharing. Patients can choose to pay in advance, and they won’t be caught off guard when a bill comes. “That’s a game-changer,” Edelstein said. “Now we’ve got them as a partner through the process. If I do that upfront with my patients, and I have a problem with the insurance company, I can call on the patient to help.”

Cedar’s post-visit billing solution aims to make it easier for patients to understand and pay their bills using a buy-now, pay-later billing approach, said Cedar CEO Dr. Florian Otto. The software includes a chat function that helps patients understand payment options and allows them to pay using a credit card, health savings account card, Apple Pay and other payment types.

The company’s pre-service offering promises to simplify the billing process for patients by telling them ahead of time whether their providers are in-network and how much they will owe out of pocket, providing them with an explanation of benefits and allowing them to fill out any necessary forms in advance, Otto said.

Cedar’s customers experience better patient satisfaction and financial performance, Otto said. The company claims around 90% of patients are satisfied with the billing process when providers use their solutions. Health systems also collect about 30% more money from patients and cut their accounts receivable days in half, Otto said.

Some providers have teamed up with technology companies to make it even simpler for patients to pay their bills. For instance, Carilion Clinic allows patients to pay by text message without logging into an app or a website, said Brett Tracy, vice president of revenue cycle for the Roanoke, Virginia-based not-for-profit health system.

The health benefits of financial well-being

Making it easier for patients to manage their out-of-pocket expenses isn’t just good for the bottom line. It can also be good for patients’ health.

A recent survey by TransUnion Healthcare found 35% of Americans with unpaid medical bills didn’t get healthcare services in the past year because they were concerned about their debt. A survey from fintech company Patientco found similar results earlier this year.

The COVID-19 pandemic and subsequent economic downturn worsened the situation, leading to a 55% increase in financial assistance transactions between September 2020 and September 2021, according to TransUnion Healthcare.

Atrium Health Wake Forest Baptist, an academic medical center in Winston-Salem, North Carolina, recently partnered with AccessOne to give its patients access to more flexible payment plans.

The automated process allows patients to enroll in payment plans with zero or low interest and longer repayment periods. It allows the health system to offer different payment options based on patients’ finances rather than having one plan for everyone, Cunningham said. “We don’t ever want to become a financial burden to anyone,” he said. “We want to ensure that the relationship between the patient and the provider is not harmed due to things that really have nothing to do with the care.”

Intermountain Healthcare offers similarly flexible payment arrangements, allowing patients up to 60 months to pay their bills, depending on how much they owe, said Jeff Howe, assistant vice president of revenue cycle outsourcing at the not-for-profit system based in Salt Lake City.

Not only has that led to improved collections, but it can also increase patient satisfaction by making it easier for patients to manage their bills. In addition, the system has freed up staff time to assist patients who can’t or don’t want to use the health system’s online payment system, Howe said.

Protecting patients’ financial health is crucial to protecting their physical and mental health, Cunningham said. For instance, if a patient receives a larger-than-expect medical bill, they might be less willing to go for a future appointment, Cunningham said. Not only could that lead to worse patient outcomes, but it may also cost patients and providers more in the long run if patients defer needed care and end up in a higher-cost setting like an emergency department, he said.