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The U.S. healthcare industry has been notoriously slow to embrace new payment systems and processes, largely due to the complexity that arises from regulatory and privacy requirements. Only 17% of consumers receive a medical bill electronically, despite over 70% preferring electronic statements. CAQH, a nonprofit alliance of health plans and trade associations, reported that the healthcare industry could save an additional $450 million each year if the remaining manual claim payments are converted to an Automated Clearing House (ACH).

U.S. healthcare spending is on track to hit $6 trillion by 2027, nearly double 2018 levels, and payers and providers are seeking innovative solutions that streamline the payment process and enhance the consumer experience as out-of-pocket healthcare costs escalate. There has been a dramatic increase in both the percent of consumers enrolled in high-deductible plans (59% in 2008 versus 85% in 2018) and the average deductible ($735 in 2008 versus $1,573 in 2018). At the same time, consumers are used to Amazon-like experiences, and now expect similar ease of use from their healthcare billing and payment interactions. Price transparency tools, digital wallets such as Apple Pay, provider ratings, and social media recommendations are becoming the norm.

There are three basic financial transaction in healthcare, not including those made from patients to payers to continue health plan coverage.

  1. The patient pays their copay before the physician provides service, typically via cash, check or payment card.
  2. The physician’s office in turn submits the claim to the payer, who settles the claim. This process typically takes many weeks, largely because payers send paper checks.
  3. The patient pays their balance after being sent an Explanation of Benefits (EOB) statement by their insurer and an invoice by the provider.

Each of the above transactions remains cumbersome and confusing for all stakeholders – the consumer, payer and provider. By capitalizing on two key trends in the space — the digitization and consumerization of healthcare — innovative payment, software and processing companies are beginning to emerge, offering specific solutions that accommodate the shifting landscape. Traditional payments companies like Global Payments and Worldpay, and healthcare-specific providers like Zelis Payments, InstaMed, PatientCo and CarePayment, have already carved out a piece of the market. The biggest areas of opportunity for other players will include digital payments, SMS and other value-add solutions—i.e., mobile point-of-sale solutions, online payment portals and integrated check-ins.

Below is an overview of innovations occurring in the healthcare payments space and leading companies seeking to create a better experience for consumers, providers and payers.

  • Text-to-Pay is expected to become an effective means of communicating billing information and increasing the likelihood of a patient making a payment. Companies targeting this market by enabling healthcare providers to communicate billing information directly to patients via text and allowing patients to make payments with a single-click option.
    • Companies: SwervePay, RevSpring, ACI Worldwide
  • Digital Solutions allow healthcare companies to appeal to consumers while delivering a compelling ROI to payers and providers. If electronic transactions were to become the norm in the industry over today’s paper processes, annual savings in overall administrative costs alone could amount to $9.4 billion, according to a CAQH. Over 90% of providers are still receiving paper checks from one or more payers. Companies facilitating electronic payment via Electronic Remittance Advice (ERA), Electronic Funds Transfer (EFT) or virtual card are experiencing strong organic growth due to greater provider adoption.
    • Companies: RedCard Systems, Change Healthcare, vPay
  • Mobile Point-of-Sale (mPOS) terminals enable providers to bring the payment process directly to the patient at the point of care. In addition, mPOS terminals offer the opportunity to eliminate or streamline redundant and cumbersome data collection processes.
    • Companies: Verifone, Ingenico Group, McKesson
  • Online Portals & Payment Plans: The percent of payments made via online member portals is rapidly increasing. In addition, adoption of automatic payments and payment plans has increased significantly in recent years. Online payment portals are meeting the needs of patients, increasing engagement, and, as a result, improving the probability of payment.
    • Companies: InstaMed, AccessOne, BillingTree, Medfusion
  • Ease of Use: Recent surveys show that 60-70% of consumers are confused by their medical bills, and, as a result, they are less inclined to seek additional medical care, and/or are more inclined to ignore medical bills. Several emerging companies are tackling these challenges by improving consumer engagement and streamlining communications.
    • Companies: Cedar, Simplee, Flywire, InBox Health
  • EHR Integration: Payment firms that can offer payment and billing solutions that are integrated directly into EHRs could quickly become leaders in the space. EHR integration eliminates double entry, allows for real time data exchange, improves staff productivity and improves the patient experience.
    • Companies: FormFast, Redox, Salucro, HealthPay24 (Invoice Cloud)