While vacationing with my family in Florida last November my 18-month-old needed medical attention. Nothing dire, but it was off-hours and couldn’t wait. That resulted in an ambulance ride plus treatment and observation for a few hours in the ER. Luckily, it ended up being just a minor detour on our vacation and all was well.

About 3-months later we received our first communication on billing… sort-of. It was a statement from our insurance company that showed the ambulance ride was billed at $2,200 and they paid $0. Having never been billed, we just waited for it to play out. The next month we got another statement from the insurer: $1,750 billed for the same ride and now $1,750 paid. Phew! About 1 month later (4 months after the event) we got a bill from the hospital for $750. It stated that the payer rejected it and we were responsible. So we checked in with the payer and it was already paid (but now it was only $615). Then 1-month after that (now 5 months from service) we got a bill from the physician — again around $700 and again they said the payer rejected it and we were responsible. Not being able to find any charges for this in our insurance statements we called the physician’s office and we’re (rather rudely) told that this was “just how it worked” and that we just needed to wait while they figure it out. I haven’t heard anything since.

We’re now 7 months past the encounter. We’ve been charged separately for 3 parts of the service, have had multiple price changes and have only spoken with one human being (who really didn’t want to deal with us). I trust I owe someone some money, but I don’t know who and I don’t know how much. I’, sure we’ll eventually get another bill (or two or three?) and we’ll get to the bottom of it all. Maybe even before the 1-year anniversary of the event.

This is a minor example of a very bizarre process that was born in the heavily intermediated world of healthcare. The problem will be exposed more and more as the industry is “consumerized” under high-deductible health plans. This process sucks for patients. Especially for those that are dealing with ongoing care and not just a one-off encounter like me. That’s why I was thrilled to hear about the A Bill you can Understand Challenge announced by HHS at the 2016 Health Datapalooza in Washington, DC. It’s a design and innovation contest from mad*pow and Health 2.0 that’s being sponsored by AARP. From the challenge page:

This design and innovation challenge seeks to tackle a current consumer pain point to help deliver solutions that result in clearer, less complex, and more understandable medical bills that ultimately improve the patient financial experience.

The contest is clearly focused on the patients’ side of things, but they do point out that “Providers, payers, and consumers all benefit if we improve the current system.” Going back to my own situation, I was definitely annoyed as the patient, but my overriding thought was really this:

How do healthcare organizations expect to stay in business while managing their customer relations, receivables and cash flow so poorly?

This approach may have worked when the entire game was played behind closed doors, but as patients continue to take on more out of pocket expense, it will be crucial for health care organizations to get their billing house in order or face financial ruin. That certainly includes getting the bills out in a clear, understandable and timely manner as the aforementioned contest aims to do, but it also means they’ll have to learn how to operate under the very different pressures of a (more) consumer-driven market.

We’re only a few years in to the proliferation of high-deductible plans and we already see more than half of the hospital bills being sent to patients going unpaid. Historically, 90% of the charges we’re paid by insurance and 65 cents of every dollar billed to patients went unpaid. The ratio could settle around 70–30, which would put another 13% of current revenues at severe risk.

Here are a few things healthcare organizations need to think about:

  1. Providers need to understand their prices and the financial responsibilities of their patients up-front. This will allow them to engage the patient at the point of service so that they can at least ensure the patient understands their responsibility and hopefully collect some or all of it at that time. Physicians already know it’s very difficult to collect from patients after-the-fact, especially if their responsibility comes as a surprise.
  2. In order to convince patients to pay out of pocket charges, it’ll become increasingly important for providers and their staff to be able to explain options and justify why the services are necessary and appropriate. This will require a new customer-service tact that’s almost completely absent from today’s healthcare system.
  3. Providers will be forced to find cheaper and more effective ways to deal with their patients problems because the out-of-pocket pressures will certainly lead to “shopping around”. Even if you manage to get paid this time, a poor patient experience or any amount off doubt on the part of the patient could cost you a customer in the future.
  4. The net promoter score (i.e. would you recommend this physician to a friend?) is huge! There’s been a lot of attention paid to physician rating sites lately. While I do think they’ll have utility at some point, nothing beats word of mouth when it comes to picking a physician. Options, transparency and billing will now carry much more weight in these “friendly referrals”.
  5. Healthcare transformation efforts like the proposed MACRA rule are putting a ton of financial pressure on practices. In order to survive these changes, healthcare organizations will need to operate very efficiently as businesses. Getting paid rates pretty highly in that category.

When patients become consumers the entire world off healthcare changes. To me this is a welcome and needed shift, but it won’t come easy. Patients will certainly be forced to deal with financial burdens much more severe than my own. This will in turn put a ton of pressure on healthcare organizations to work more like “normal” businesses. The question facing healthcare leaders today is, how do we get from here to there?

Discussion Details

On Wednesday, May 11, 2016 the Business of Healthcare community will take a closer look at the shifting landscape in billing and patient engagement in #hcbiz 13.

12:00 PM EST — Tweet Chat

The tweetchat begins at 12:00 PM EST and will ask 3 questions in 30 minutes:

Q1: What new billing practices or tech is needed in order for healthcare organizations to succeed when patients are footing more and more of the bill?

Q2: What can providers do to better engage patients on costs and options up-front to ensure they get paid? What tools can they use?

Q3: How should providers measure their own customer service performance to ensure repeat business and referrals? What tools can they use?

(Follow the #hcbiz hashtag on Twitter or use an app like tchat.io to join the conversation).

12:30 PM EST — Blab

Then at 12:30 PM EST, the #hcbiz Show will dive deeper with a live 1-hour panel. Subscribe here!