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Healthcare can no longer afford to resist the digital revolution

Insight Article - August 13, 2018

Billing & Collections

Business Operations Technology

Chris Seib
Earlier this year, the Advisory Board released findings from its Annual Health Care CEO Survey “to identify what issues are currently of greatest strategic importance to our hospital and health system members.” Out of 33 possible issues, this year’s respondents rated cost containment as the highest concern for the futures of their organizations, even over issues related to revenue and consumerism.
These concerns aren’t difficult to substantiate. One only has to look to the overall spending of the industry to understand the enormity of the cost issue. In 2017, U.S. healthcare spending reached nearly $3.5 trillion, or $10,348 per consumer, at a projected growth rate of 4.6%. Healthcare spending has become nearly a fifth of the nation’s total Gross Domestic Product (per Centers for Medicare and Medicaid Services). How much longer can the industry sustain these costs is a question that remains unanswered, weighing heavily on the minds of providers. 
Providers for their part have made significant investments in digital tools to streamline daily operations and thereby reduce costs related to manual and paper-based process. Digital tools, such as patient portals and EHRs, hold great promise for the industry’s costs problems, but their potential remains an untapped promise. According to the 2017 CAQH Index Report, the industry stands to save $11.5 billion a year if it were to fully adopt electronic transactions, with providers claiming $9.5 billion of that total.
Resistance among healthcare providers to the digital revolution is often and anecdotally attributed to privacy and security concerns related to HIPAA regulations. But consider the following: paper cannot be encrypted and can easily be lost, stolen or copied.

The friction of paper: The ineffective cycle of patient statements

The paper problem for providers is especially acute in payments, where touchpoints are dominated by paper. Nowhere is the pain of paper felt more than in paper statements to patients: 58% of providers surveyed reported that paper statements were the primary method of collecting from patients, but 41% of providers have not changed their patient statement in the past five years. The reliance on an outdated way of billing may be a major contributor to why 73% of providers report that it takes longer than 30 days to collect from patients.
Consumer surveys reveal similar findings about providers’ reliance on paper statements. Four out of five consumers surveyed reported that they receive their provider bills via mail, and 70% of consumers reported being confused by their provider bills. While there may be many factors that add consumer confusion in the provider billing process, the possible connection between paper and confusion is hard to ignore.
The connection becomes much stronger when considering the importance consumers place on an easy-to-read bill – 89% said it was important for their medical bill experience. An easy-to-read bill ranked only behind security in the healthcare payments experience. A breakdown by age shows the importance is valued by all generations: 66% of Gen Y-ers, 58% of Gen X-ers, 64% of Baby Boomers and 63% of seniors.
Consumers are seemingly ready for healthcare to jump on the digital revolution. Consider this gap: 79% of consumers still receive a paper medical bill, but only 21% of consumers want to use checks to make healthcare payments.

The payer payment drain

The CAQH CORE Operating Rules mandate that electronic transactions, including electronic remittance advice and electronic funds transfer (ERA/EFT) be offered by every payer. Though the mandate fully went into effect years ago, providers have been slow to adopt the electronic alternatives to transactions with payers.

For ERA/EFT adoption in particular, 86% of providers reported still receiving paper checks and EOPs from one or more of their payers. There is clearly a disconnect between how providers want to get paid and how payers send payments as providers overwhelmingly preferred payer payments as ERA/EFT (85%) over paper checks (13%).

For providers that make electronic transactions with payers a priority, there is a clear path to cost containment. According to the 2017 CAQH Index, electronic transactions with payers can save providers real time and money. The data in the report says that if providers were to go completely electronic with payer transactions, their organization could save more than $15 and 40 minutes for each claim.

Time to retire paper

The time for providers to retire their reliance on paper has long since passed. Paper causes provider processes to take weeks and months instead of hours or days via digital processes. Paper costs providers more and more each year while electronic alternatives are significantly less expensive.
If providers were to fully embrace the digital revolution, providers could realize the dual benefits of reducing overhead costs and answer consumer demands for a more convenient payment experience.

Additional resources

For more on these trends impacting the industry, read the Trends in Healthcare Payments Eighth Annual Report: 2017.

About the Author

Chris Seib
Chris Seib
Chief Technology Officer & Co-Founder InstaMed

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