How providers can improve health equity and their bottom lines

Physicians and other health care providers face the double-sided challenge of providing effective care to patients and maintaining business operations. In a typical business setting, a company delivers a service and the customer compensates them. It’s a straightforward transaction. However, unlike other businesses, health care professionals are perhaps alone when it comes to when, how much and whether they get paid. Between insurance companies, adjudicators and ultimately the patients themselves, collecting for health care services is a convoluted process leaving much of the onus on providers.

According to the American Hospital Association, hospitals of all types have provided about $745 billion in uncompensated patient care since 2000. Uncompensated care creates an administrative burden, significantly impacting a provider’s financial well-being. Tracking down payments from patients or dealing with complex insurance claims forces providers to allocate more and more resources to bill collection, often to no avail. This situation is just as difficult for physicians in independent practices. They spend hours seeing patients and managing a business that doesn’t have the same resources as a large hospital or health system. Allocating any additional resources to chasing down bills stretches them even further.

Almost nowhere in the business world is there less certainty about getting paid for services rendered. It’s hard to imagine a business opening its doors knowing that it may or may not get compensated, or only get a portion of its bills paid. The additional rub in health care payments is that many of the tactics providers employ to chase down payments are often ineffective. This includes sending multiple letters, texts, calls and, of course, several iterations of the bills themselves. With the average American receiving more than 70 bills and statements per year, these repeated appeals are likely to be ignored.

As the cost of health care continues to rise, patients find it increasingly difficult to afford and pay for care, often avoiding the doctor altogether. Two out five working-age adults have reported that delaying care due to cost has caused existing health problems to worsen. The situation gets worse for patients in lower-income brackets who are nearly twice as likely to report delaying or avoiding care due to cost. Several studies have shown significant health-related differences exist between individuals below 100% of the federal poverty level and those above 200%.

When patients do access care, some providers are now being forced to ask for up-front payments, which puts health care in the precarious position of being a benefit for the haves and a burden for the have-nots. It’s anathema to a provider’s belief about being in service of its community.

Innovating providers out of the collections business

A new approach to this crisis in care is needed and, surprisingly, it’s a simple one. Physicians and other clinicians should be paid in full for the amount they’re owed regardless of a patient’s financial situation. New third-party financial solutions have emerged as powerful tools to achieve this goal. These services pay health care providers up front, ensuring their financial stability, and offer affordable, interest-free payment plans based on a patient’s ability to pay. Using a credit-blind approach, they simplify billing with a unified monthly statement that is digestible for the patient. This patient-centered model allows everyone to access the care they need when they need it, regardless of their income level or creditworthiness. Providers, in turn, can strengthen their financial position and focus on delivering quality care and building the doctor-patient relationship.

These third parties use advanced algorithms to make the system work more efficiently for both providers and patients with little or no system integration or migration work necessary. Consider the relatable example of a ride-hailing service. Technology innovations allowed for the complete disruption of the taxi business by making the experience of getting a ride predictable, simple and more affordable. Many dimensions of the health care system are at similar technological crossroads. Providing access to care for those for whom affordability is a burden must be a priority.

It’s clear the current health care billing and payment systems are at an inflection point. Physicians and patients alike are seeking ways to address increasing costs and overly complex billing processes. Innovations in health care payments are imperative if we are to transform the system. Creative financing through third-party solutions provides respite from both issues. By paying providers directly and fully while allowing patients to access care through affordable payment plans, these third-party financial solutions help reduce cost and confusion for everyone while delivering a measurable return on investment for providers. It’s a win-win-win: Providers get to refocus on providing quality health care and patients receive care when they need it instead of when they think they can afford it, improving health outcomes for all and improving the medical cost trend for commercial payers and self-insured employers.

Jonathan Moss, MBA, FHFMA, has devoted his career to serving the health care community and client, clinician and organizational needs. With a strong background in consulting, project management and provider revenue cycle performance, he joined Health Payment Systems/PayMedix as the vice president of consumer financial engagement.

Robert M. Yawson, PhD, is professor of management and chair of the Department of Entrepreneurship, International Business, and Strategy at Quinnipiac University School of Business. His research focuses on social finance, impact investing, and using the “wicked problem construct” to promote organizational effectiveness and change. He is co-editor-in-chief of Organization Management Journal and coauthor of “Navigating Big Finance and Big Technology for Global Change.”