Painless payments: enabling fair, accessible and friction-free healthcare

At Health First, a Florida-based network of hospitals and diagnostic centres, staff work with digitised data to run financial estimates for every patient, regardless of their insurance plan. Using a technology platform for all front-end verification, eligibility, estimating and propensity to pay, the network is now seeing 75 per cent of premiums collected automatically every month – a change that has relieved pressure on its back office, which was struggling to keep up with the network’s rapidly growing member base. The changes at Health First highlight the wider potential for technology to help solve one of healthcare’s biggest challenges: payments.

“Digital transformation is making an impact on the healthcare industry, from providers and payers to medical device manufacturers, pharma and biotech,” says Takis Georgakopoulos, Global Head of J.P. Morgan Payments, part of the Corporate and Investment Bank at J.P. Morgan Chase & Co. “By embracing digital transformation, including modernising and streamlining their payments infrastructure, this will ultimately benefit the healthcare system and patients.”

A new digital frontier

Telehealth, one of the fastest-growing areas of healthcare, has the potential to slash the high cost of face-to-face care – everything from regular check-ups for ongoing conditions to training for medical professionals. It also presents a huge opportunity for healthcare providers to innovate their payments systems.

In Asia, incorporating digital payments into telehealth has the potential to revolutionise healthcare. Many countries in Asia – such as India – are already leading the way on digital payments in general. Even before the Covid-19 pandemic, the Asia-Pacific region was ripe for change: digital penetration was high, the population was ageing and the number of doctors per 1,000 inhabitants was generally lower than the OECD average. But since the pandemic, demand for telehealth has exploded, with estimates suggesting that it could create up to $100bn in value by 2025, up from $37bn in 2020. In Europe, the Middle East and Africa, as well as in Latin America, it is a similar story.

The digital platforms on which telehealth services run can integrate payment capabilities and can provide a range of options for managing insurance cover and reimbursement – a sticking point in many healthcare systems around the world, in particular the US.

Georgakopoulos of J.P. Morgan Payments says that technology can help untangle the complex and inefficient web of payments in healthcare while offering customers the same sort of payments experience they benefit from in other areas of their life. “Today’s healthcare consumers want the same convenient, contactless payment experiences that other industries already offer,” he says. “Healthcare organisations now have the ability to accept payments at the point of service as well as through online channels.” One option could include payment plans or financial products common in the retail sector, such as access to low-interest credit or providing “pay later” options where appropriate. AI-based systems could also help patients budget better and optimise their expenditure, by tracking their health needs over time and predicting potential upcoming costs.

It is not only customers who would benefit from innovating payments’ systems. Highly complex billing in the health industry has put huge pressure on providers’ administrative capacity, creating bottlenecks and swelling costs as staff struggle to process the paperwork. “As insurance companies cover less, and out-of-pocket payments grow, providers are seeing their back-office costs rising to deal with all the claims, denials and adjudications,” Kaushik Bhaumik, EY’s US Health Technology Leader, says of the US market. “It is one big domino effect ripping through the sector.”

It’s estimated that around 78 per cent of health providers collect from patients using paper and manual processes. Not only that, but 69 per cent of providers say it typically takes 31 days or more to receive payment after a patient visit. This creates unnecessary and avoidable delays compared with instant electronic payments. The paper-based nature of payments in the industry also means that purchasers are more likely to miss out on cost-cutting opportunities, such as discounts offered by suppliers for early payment. One study found that switching to fully electronic transactions could have saved the US health industry more than $22bn of the $55bn it spent in 2022 conducting nine common administrative transactions – up from $11.6bn of administrative spending in 2013.

Covid-19 underscored the importance of clinical trials for getting life-saving drugs and vaccines to market. But it also illustrated the multiple challenges in getting new medicines and treatments approved quickly. Payments, often considered a back-end process, can improve the recruitment, retention and reimbursement experience both for participants and for medical sites.

Participants in trials want multiple options for collecting stipends and reimbursements, and they want to see an increasing availability of instantaneous and digital payments. Meanwhile, sponsors want flexible funding options in the country and currency of their preference, as well as data transparency and timely reporting of payments to sites.

Digital payments can meet these demands all along the value chain, providing scalable solutions with global breadth and reach that have the flexibility needed to support sponsors, sites, participants and vendors. These include opportunities to improve expense reimbursements, investigator and site payments, business-to-consumer participant payouts and payments for trial partners in areas such as rideshare, logistics and technology.

How digital payments can unlock opportunity

As payments technology evolves, the global healthcare sector could eliminate these inefficiencies while creating connections across different networks and facilities to communicate more efficiently. Integrated payables, for example, could help simplify payables processes and improve cash-flow visibility. While interoperability will take time within the industry, the secure exchange of information between networks remains a priority for innovation within healthcare. Interoperability also stands to generate innovative business models. For example, providers could use analysis of trends in payments to offer alternatives to upfront costs, such as payment plans or subscriptions for medical devices or equipment. This would provide recurring revenue for the device manufacturer, while allowing healthcare providers to outsource maintenance costs.

Digital payments in healthcare open up opportunities along the supply chain, and provide solutions for increased business resiliency. Take sales finance for pharmacy benefit managers – which is one way to monetise rebate receivables paid by pharmaceutical customers, and to improve cash flow by getting paid early rather than endure current payments terms, which stretch to 90 days. Inventory finance for medical technology and equipment distributors is a way to build just-in-case Inventory on a just-in-time basis to help address complex supply chains and provide solutions to shortages in the market. Reducing inventory holding time can also improve debt-to-equity ratios and shareholder value. In addition, it can aid in negotiating better payment terms with vendors.

As the healthcare industry accelerates its adoption of technology, digital payments solutions are becoming a strategic lever for wider transformation. As Georgakopoulos says: “Payments stand to enable the future of healthcare and drive innovation in the industry – from helping healthcare organisations keep up with digital transformation and build better payment platforms to offering solutions that optimise working capital.”