Bank and venture capital investments in health care technology are skyrocketing, but like a chronic ailment, billing and payments remain bogged down in paper. That creates a consumer experience that's vastly different from what they have become accustomed to in an era of mobile wallets and e-commerce.
"Consumers are accustomed to paying their household bills through the channels and methods they prefer," said Deirdre Ruttle, chief marketing officer at InstaMed and head of health care payments marketing at J.P. Morgan. "Health care still needs to catch up. Providers often offer consumers limited payment channels, which typically don’t include preferred digital options."
J.P. Morgan and InstaMed, a health care payments company in Philadelphia that J.P. Morgan acquired in 2019, just released a report on trends in health care transactions that showed a lingering gap in automation. This shortfall is often attributed to the
For example, the J.P. Morgan/InstaMed report, which tracked $460 billion in payments processed on InstaMed's network between 2018 and 2021, found 70% of consumers receive medical bills via traditional mail, but only 9% want to pay that bill with a paper check.
“This wide gap really shows the heart of why consumers will end a payment when they cannot make a payment how they want," Ruttle said.
J.P. Morgan and InstaMed also found 25% of consumers ended a transaction for a medical bill because they couldn't pay with a credit card, 70% of providers take more than 30 days to collect after a patient encounter, and 41% of third-party payers were challenged to collect patient premiums.
"When you think about mobile and online, it’s all about meeting the consumer at a time and place of their choosing," Ruttle said. "Health care consumers want to pay and manage money digitally through multiple options that are convenient and simple to use, much like they do for other consumer payment experiences."
Other research also suggests a gap in health care payments. While clinics and medical offices are increasingly adding payment portals, mobile apps and contactless payments, only 28% of patients use an online portal and more than half receive a bill in the mail, according to U.S. Bancorp. U.S. Bank also reports 37% of consumers want to pay online, 32% want to pay through a mobile app and half want to use a contactless credit or debit card. Additionally, half of consumers said health care is the most difficult industry to make a payment. U.S. Bank surveyed about 1,100 adults in 49 states.
"At U.S. Bank and Elavon, we are working with health care providers and insurers on real-time payment solutions that provide a faster, more convenient payment experience for patients sending or receiving money," U.S. Bank's public relations office said in an email. "We have seen increased adoption of both automation capabilities and digital tools, like contactless, to accept payments safely in this pandemic environment. We see tremendous potential for real-time payments to streamline an often cumbersome healthcare payments landscape."
The payment challenges come as funding floods into health care technology. Investments in digital health care startups, for example, reached $57 billion in 2021, up 79% from 2020, according to
These "medical care from home" services expanded during the pandemic and are digital and remote by nature. Along with the continued growth of general e-commerce, these pandemic-era digital health care options should create long-awaited momentum for automated payments and shorter processing times, according to Ruttle.
"There is a massive opportunity to connect with consumers throughout their health care payments journey," Ruttle said. "This means engaging with consumers about their benefits and payment options from the time they schedule an appointment through paying their medical bills."
Banks and fintechs have added payment technology to their health care services in an attempt to boost uptake of digital payments or to improve the general patient and provider experience.
Among technology providers,
"These advanced technologies empower teams with proactive and actionable insights, optimize workflows, increase their ability to do more with less, and ultimately help solve the industrywide burden of staffing shortages," said Matt Hawkins, the CEO of Waystar, which is based in Louisville, Kentucky. "This allows providers to proactively determine insurance eligibility, provide estimates of costs, and secure authorizations.”
Another firm, Episode Six in Austin, Texas, offers a technology plug-in for financial institutions and other companies to introduce financial services. Episode Six has
"Payment automation is dependent on tech stacks that are being modernized across health care. As new technology is deployed, automation will drive operational efficiencies and better experiences for payers and payees across the ecosystem," said John Mitchell, co-founder and CEO of Episode Six. "While the opportunity is clear, this process is just beginning."
Outside of transaction automation, there's an additional opportunity to improve health care payment experiences by addressing unexpected and deploying payment portals that explain terms associated with health care, insurance, financing and patient responsibility as early as possible. J.P. Morgan and InstaMed's research found 87% of consumers were surprised by a medical bill in the past year. Digital billing can be used to communicate costs and patient responsibility in a clear manner, Ruttle said.
"Every interaction with consumers should include a discussion of their financial responsibility and ways to pay," she said. "When consumers are empowered with that information, the entire health care experience gets better."
