The demand for digital services and payments that COVID-19 has carried in its wake is turning digitization from an aspiration to a necessity for health systems. So creating a digital front door for patients to access their healthcare plans is getting more attention as a way to streamline the entire consumer experience, from scheduling all the way through collection of the payment. It’s certainly a concept that has captured the attention of Flywire Executive Vice President and General Manager of Healthcare John Talaga.
Healthcare in the U.S. is an incredibly expensive proposition. In 2019, $3.8 trillion was spent on healthcare annually, an increase of about 5 percent from the previous year. And as businesses increasingly offer employees higher deductible plans, the share of how much of that bill is being picked up by consumers is on the rise as well. Consumers are paying 4.6 percent of that total, or roughly $406 billion of total spend. Per person, said PYMNTS CEO Karen Webster in a conversation with Talaga, that adds up to roughly $11,000 annually apiece.
“The one thing the pandemic has done is exacerbated the whole affordability issue with patients,” said Talaga. “It’s bringing attention to a problem the hospitals had anyway, unplanned medical bills that patients, even in normal times, had difficulty affording. But with all the pressures created by the pandemic, it has really put a spotlight on that fact that what we need to be focusing on is helping patients pay over time.”
“Faced with medical bills they believe they won’t be able to pay,” Talaga said, “patients are skimping on treatment that they actually should be getting, because they believe they can’t afford it. Or they’re getting the treatments, skipping out on the bill and then finding themselves fighting it out with the third-party debt collector the hospital is forced to send after them.”
“It’s a bad outcome for patients,” Talaga said, “and a terrible one for hospitals that have also been hit incredibly hard by the COVID-19 pandemic. And it’s one they can start battling back against by upgrading their payments offerings.”
Building The Right Payment Plan
The question of whether a health system can modify its payment policies and systems is usually answerable in the affirmative. When it comes to payment plans, he said, the question isn’t whether or not health systems can have them at all, but how can they use payment plans more strategically.
Using automation and data analytics, he said, Flywire can scan data trends about patients and establish what their financial class is, what their demographic is, employment, status, income and credit-to-debt ratio. With that information in hand, he said, hospitals can drive repayment offers that a patient will consider because they can actually afford them.
“For the most part, hospitals have been extremely receptive to us using our experience with other hospitals that are doing it,” Talaga said. “They’re achieving great results and letting us help recommend and consult with them in terms of how that should be set up.”
And those setups, he noted, can vary.
“We’ve shown, in 95 percent of cases, that patients have the ability to finish the payment plan without default,” Talaga said. “When health systems can see that, then it becomes about the guidelines that we’re able to set with the hospital for how they offer plans. We help them see that they don’t necessarily have to offer long-term plans to certain patients. Even a three-month plan makes it easier and more affordable for them.”
Moreover, he said, while the installment plans don’t come with interest charges for patients, they do come with a cost in the form of a transaction fee of a few dollars. It’s not a crippling cost to those who need long payment terms, he said, but it is enough to motivate patients who can repay faster to do so rather than take on additional transaction fees.
The Evolving Future Of The Market
The Flywire approach begs a question. If healthcare is increasingly embracing a buy now, pay later outlook on patient payments, do they worry that other BNPL competitors will start competing in the healthcare space? Talaga said the answer to that question is a bit complicated.
In some areas, he said, they do expect to see other BNPL players entering the field, perhaps working with small practices and specialty providers like dermatologists or orthopedists. But beyond that, he said, he doesn’t see much competition emerging in the world of large healthcare systems where Flywire centers its operations. Because, he said, it’s a very difficult place to break in.
“When you get into a large health system payments and settling payment, the results involve very complex, bending-steel-level of difficulty type integrations,” he said. “That’s what is required on the front end to even get the bill out and manage this stuff. So I don’t see those companies being able to play in this area because Flywire has already built those integrations. There is also a lot of vertical expertise that goes into making these things work and ultimately completing a payment.”
Being able to estimate what a patient’s responsibility is going to be for payments is becoming common. But being able to actually set that plan upfront to make it something that both the patient and the hospital can live with, he said, is the incredibly hard part. Hard, he said, but necessary. Healthcare is a radically changed environment from what it was even five years ago, and accelerated by COVID-19, he said — one whose future will increasingly be tied up in providing eCommerce services for patients, as well as a true digital front door for them to walk through.
“What they are going to need to do next year and beyond is be able to provide all the eCommerce services across the healthcare enterprise in a single place where patients can manage and store their data,” Talaga said. “So that’s really a big focus of ours in 2021.”