As healthcare costs continue to rise due to medical inflation and companies shifting more employees to higher deductible plans, American families will soon face increases in their healthcare costs. Unexpected medical expenses and growing out-of-pocket costs have already taken a toll on many families’ budgets. There are growing concerns about these added costs causing many Americans to make the decision to avoid or delay care, which would widen the gap in health equity for vulnerable populations.
To attempt to address these concerns, some healthcare providers have shifted to offering direct financing to their patients. This, however, places the burden of debt collection on those providers. Other providers have chosen to enroll patients in financing products that accrue interest and fees, or they have begun to use other billing practices that add to patients’ medical debt. Still, other providers have adopted policies that require upfront payments, but these also encourage delays in medical treatment for patients who lack the money or credit to pay upfront.
What Actually Works
For some healthcare providers, such as hospitals, the patient responsibility portion of bills make up a relatively small portion of receivables. For others, it can be more a more significant problem. Regardless of how much patient billing contributes to receivables, all healthcare providers should be concerned about the implications of the increased pressure of medical inflation.
Healthcare providers should remove themselves from being involved in any patient financing. Providers should instead explore new financing models that relieve consumers’ medical debt burden, while simultaneously ensuring full payment for providers. These new to market financing options can guarantee prompt, full payments to healthcare providers and give consumers affordable repayment plans without additional fees. Specialized services take over the financial relationship from the provider and streamline the payment process. Providers are paid upfront, and then the specialized services assume the extended payment relationship directly with the patient.
Some financial platforms provide credit for patients’ out-of-pocket (OOP) costs at low to no interest. Commercially insured patients with high deductibles particularly benefit from this approach. They can be offered manageable repayments plans for allowed in-network charges for up to their OOP maximum. These platforms guarantee payment to providers and credit to all patients, regardless of their credit record, reducing health inequity.
Benefits
The patient experience is drastically improved with these new payment models as well. The conventional medical billing systems tend to generate repetitive information and lead to confusion for patients about how much they owe. Traditional Explanations of Benefits (EOBs) are now increasingly more costly, complex, and confusing. However, these new models eliminate billing confusion by consolidating information in a single statement for all care received, regardless of location. This allows patients to take control of their medical expenses and engage more directly with their provider, enabling them to receive services based on their needs without the constraint of their budget.
Conclusion
Providers can take steps to incorporate these alternative, patient-friendly financing models to help reduce the impact of medical inflation on their patients. By working to mitigate these pressures, providers will see their patients more empowered to seek medical care when they need it, and they will take the stress out of collecting payments for services. The Baldwin CPAs team has decades of experience in the healthcare industry and can help you determine what financing models and accounting systems would best suit your healthcare business. Contact our team today to discuss how Baldwin CPAs can help address your financial concerns.