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Knowledge Expansion

Healthcare’s blind spot: Payment experience

Insight Article

Billing & Collections

Chris Seib
The new reality for healthcare providers means that very few patients have been left unburdened by increases in payment responsibility. Most healthcare providers are left to collect more frequently from patients and for higher amounts. Where providers could once solely rely on payers for revenue, patient payments are a growing portion of their bottom line and have become a key component of a provider’s financial outlook.

The industry has been slow to react to the increasing burden on patients, still clinging to outdated processes for healthcare payments. Dissatisfaction among patients has become hard for providers to ignore. If providers were to tap into the power of the digital age, time to payment for patient collections would improve, and so too would patient experience.

Living in the new digital world

We are now living in the digital world, created in large part by the internet of things (IoT). IoT gives consumers a constant connection to the world. In 2019, an estimated 14.2 billion connected things were in use, and that number is expected to reach 25 billion by 2021.1 Smartphones are an important piece of this new reality. Not only do more consumers have smartphones, they are also looking at their devices constantly — on average 52 times a day.2

The constant connection created by the IoT and smartphones has given birth to the on-demand economy, which allows consumers to satisfy their demands at a moment’s notice: 83% of Americans agree that the on-demand economy makes life more convenient and efficient.3 Online payments are now a standard practice for consumers and a growing share of overall payment experiences. The sustained growth of IoT, smartphones and the on-demand economy prove the digital world is here to stay, providing convenience for patients.

Increasing patient responsibility

Providers would treat a patient and then bill the patient’s health plan for the costs associated with the encounter. Now, trends in healthcare payments tell us that providers must reach out to the patient for payment related to that encounter due to an increase in payment responsibility. In 2018, 69% of providers reported an increase in patient responsibility compared to the prior year.4

High-deductible health plans (HDHP) are a major contributor to the rise in payment responsibility. More consumers are now enrolled in plans with some form of a deductible, as 85% of covered workers had a deductible in 2018 compared to 59% in 2008.5 Not only do more consumers have a deductible, but the deductible amount has increased significantly, too. In 2018, the average deductible was $1,573, compared to $735 in 2008.6 The combined growth in number of deductible plans and average deductible growth result in a 212% total increase in the burden of deductibles.

When HDHPs were first introduced, many in the industry thought higher out-of-pocket costs would reduce overall utilization of healthcare services — if patients had “skin in the game,” they would be less likely to make unnecessary provider visits. Between 2013 and 2017, healthcare utilization declined only 0.2%, while medical costs increased 17%.7 This trend demonstrates that HDHPs do not curb consumer usage and instead increase the amount providers must collect.

Increasing patient dissatisfaction

Although payment responsibility has increased dramatically in recent years, healthcare organizations have primarily communicated with patients through mailed paper statements as they did half a century ago. The content and layout of those statements have not changed much either. This could be why 70% of patients reported being confused by their medical bills.8

Surprise and confusion with medical bills can also stem from a general lack of communication between healthcare organizations and consumers. Patients are not usually aware of their responsibility until much later in their healthcare journey. For patients, payment responsibility after a visit is unlike many other payment experiences in which there is a clear price tag and an understanding of how to pay for that cost.

In healthcare, it is not uncommon for patients to receive unexpected bills from providers, higher-than-expected balances or even to be sent to collections. In fact, 93% of patients were surprised by a medical bill in 2018.9

As patient experience declines through increasing payment responsibility, providers struggle to collect from their patients. The issue may be that collection processes favor payer payment practices and have not established or prioritized the necessary connections to collect from patients. Whatever the reason, most providers agreed that they could not collect balances, including balances for a larger amount, in a timely manner: 81% of providers cannot collect $1,000 or more in 30 days.10 The longer providers have to wait for any payment, the harder it is to stay solvent.

Closing the disconnect with patients

The largest opportunity to improve the patient experience is for provider organizations to eliminate the reliance on paper and manual processes for collections. Patients prefer to connect with providers through electronic and automated payment channels, but that preference is not very often met by provider organizations.

A prime example of this disconnect is the check-in experience, in which 70% of providers rely on paper forms and staff to collect information from patients,11 while those same patients are using their smartphones in the waiting rooms.

Providers do not necessarily have to overhaul their entire payment process to begin improving the payment journey for patients. Instead, supplementing the current process with electronic options offers an opportunity to increase connectivity with patients in new ways. For example, paper statements can be updated to include instructions on signing up for eStatements, which is a popular way to receive bills in other industries and underutilized by providers. Only 17% of patients reported receiving medical bills electronically, while 71% of patients want to enroll in eStatements from providers.12

The trends in healthcare payments clearly and repeatedly delineate that patients want automated and electronic channels to pay their medical bills. If providers continue to ignore these trends, the consequences could extend beyond low collection rates to patient loyalty. Experience matters for patients, as 80% reported that “convenience factors” would be enough to make them switch providers. More than half of patients would consider switching providers for a better healthcare payment experience.13

Achieving more with healthcare payments

Increases in patient responsibility are shaping the future of healthcare payments, and the heavy reliance on paper in the industry — 90% of providers rely on paper and manual processes for patient collections14 — should change.

In addition to finding ways to improve the patient experience, providers have the imperative to adopt electronic and/or automated payment options to ease the burden of collections for their organizations. Streamlined processes have the potential to save providers up to 40% for effort-intensive workflows.15

To change course, provider organizations need only to focus on an area that already comes naturally — listening to patients.


1. “Gartner identifies top 10 strategic IoT technologies and trends.” Gartner. Nov. 7, 2018. Available from:
2. “Global mobile consumer survey: U.S. edition.” Deloitte. Available from:
3. “PwC US finds robust consumer appetite for new sharing economy.” PwC. April 14, 2015. Available from:
4. InstaMed. “Trends in healthcare payments ninth annual report: 2018.” Available from:
5. Kaiser Family Foundation. 2018 Employer Health Benefits Survey. Oct. 3, 2018. Available from:
6. Ibid.
7. HCCI. “2017 Health care cost and utilization report.” Feb. 11, 2019. Available from:
8. InstaMed.
9. Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.
15. McKinsey. “Digital is reshaping US health insurance — winners are moving fast.” December 2018. Available from:

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About the Author

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

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