What Do Cashless Payments Have To Do With Healthcare?
Cash just isn’t what it used to be. Rather than stopping by the ATM, American consumers are turning to mobile payments. In fact, the mobile payments market went from $69.8 billion in 2018 to $98.8 billion in 2019–a 41% increase. It’s revealing that more than 1 in 10 Millennials are already using digital wallets for all of their purchases. Meanwhile, the COVID-19 pandemic has only accelerated the shift to a minimal cash economy, with the use of contactless payment systems like Apple Pay growing an estimated 10–20% as consumers try to minimize their risk of infection.
Yet healthcare still lags behind when it comes to mobile payments. As recently as 2017, 86% of patients reported receiving paper bills, and 88% paid by check. Perhaps not surprisingly, 77% of providers say that it takes them longer than a month to collect payments. In short, the $3.65 trillion healthcare industry is being smothered under an avalanche of paper and complexity.
But the need for simplifying “how I pay” for healthcare through digitally-enabled features isn’t the only area where payment simplicity, flexibility, and choice is needed. As 70% of patients struggle to understand their medical bills, there’s also an increasing need to simplify “what I pay” and “who I pay” when it comes to healthcare — especially in a post-COVID era.
As employers are forced to rethink their healthcare investments, their cost-shifting is creating a greater market of cash-pay consumers who will demand greater value than the traditional fee-for-service model has afforded them. The necessary transition towards value-based care will accelerate the need for technologies that can efficiently collect cash directly from patients for services. And that means the relationship between payors, patients, and providers from a payment perspective is likely to radically change and simplify.
Providence’s Digital Innovation Group is focused on steering innovations around consumer-driven and digitally-enabled payment models on both the front and back end of the relationship. That could mean the development of personalized plans with flexible coverage amounts and enrollment timelines or it could result in personalized and low-to-no-interest financing products that factor in predictive payment models. For this new cash pay market, there is even the opportunity for new forms of security-backed healthcare loans.
What’s clear is that digital payment platforms will require flexible and personalized products based on need, conditions, payment experience mixed with predictable and transparent pricing across all aspects of care. It includes a payment process that reduces stress, keeps patient information secure, minimizes waste, and enhances the overall patient experience.
Pre-COVID, 68% of patients preferred to pay their medical bills online, and 4 out of 5 patients said they’d choose online payment of their healthcare insurance premiums. In a post-COVID world, digitally enabled payment models are more than just consumer preferences, they will inevitably define an important next chapter of healthcare.
The Digital Innovation Group shares insights and opportunities for digital entrepreneurs on the future of digital payments as well as other ways healthcare is changing in a new, free report: “Evolution: Business Model Movement Toward Value.” This is one of the reports in the Digital Innovation Group’s COVID-19 Digital Insight Series. All of the reports are available for download at no charge on the group’s Resources page.