Healthcare providers face ongoing challenges around revenue cycle. A common refrain is that collecting small bills ($500 and under) is a major sticking point for providers because it costs so much to collect relatively small amounts. Two vice presidents of business development and revenue cycle – one from a national health system and one from a regional provider – have both recently affirmed this as a problem.

The issue was brought home in a conversation that took place in the Health:Further office between two team members, both in their mid-20s (more below on why their age matters). It started when one person described a common story: the large bill he received for an episode of care in which, he said, almost no care was actually delivered. He left, happy to be healthy but perplexed when a massive bill showed up in the mail.

His response? “If you asked me to pay $200 I wouldn’t care. But $800 or $1000?”

'If you asked me to pay $200 I wouldn't care. But $800 or $1000?' - The gap between perceived value and the patient's bill is creating #RevenueCycle problems. #RiseOfTheConsumer Click To Tweet

I’ve been working on the idea that setting patient expectations around their financial responsibility before care is delivered will help providers collect more and give patients a better experience. That’s how every other industry works, right? So I tried out that idea here… What if, I asked my colleague, nothing else changed in the system except that you were told what your service would cost when you walked in? Or for more complex situations, if the provider gave you a general range of what you might be looking at. “Would you be happier?”

“I’d be happier but I still wouldn’t want to pay it.”

Well ok. With an n of 1, the idea is only halfway right.

Actually, it’s better than that. His response of “happier but” reveals a massive underlying problem in healthcare today. My colleague, and people in general, don’t want to pay their healthcare bills because the out-of-pocket costs don’t appear to match the value of the service rendered. Whether they actually do or not is beside the point, and this is where providers and payers miss the mark. The cost of an episode of care may be completely justifiable. But patients have no concept of what they’re receiving and have no benchmark for its value. (Let’s put aside high acuity “whatever it takes to save her life” situations here.)

But patients have no concept of what they're receiving during an episode of care and have no benchmark for its value. Click To Tweet

As an aside, this is true for pretty much everyone across demographic segments. However, Millennials in particular have trust issues. Couple a lack of transparency on the part of the system with a lack of trust on the part of younger patients and you get a lot of people not excited about paying their bill. “Not excited about paying” could quickly turn into “not paying,” which looks very much like a revenue cycle problem.

Price transparency in healthcare is part of the solution, of course. Another member of the team pointed out that when you go to the Apple store you know what an iPhone will cost. “Maybe there’s a monthly fee and that’s a little hard to understand. But generally, I see the price and they won’t give me the phone until I give them the money. It’s a very clear transaction.”

Navigating the administrative side of healthcare, on the other hand… Like, say, balance billing?

No one except for the patient is particularly incentivized to change the status quo at the moment. We at Health:Further don’t think that will be true for much longer. Aside from policy changes (again, see the debate about balance billing), the rise of the consumer in healthcare will create enough of a shift in the financial power base that providers will have to change. For one thing, just publishing the charge master to comply with new CMS regulations won’t be enough. Providers will have to explain what it all means and how those line items combine into a complete episode of care for a hip replacement or appendectomy.

Even upstream of current transparency initiatives is basic healthcare literacy. One of my colleagues asked why navigating the healthcare system isn’t taught in schools.

“You look at babies playing with iPads now. It’s part of their life, right? I really think that if you have just a simple early education, even if you just go through all the health apps to see what’s on there.”

And this point got us all thinking. Teaching kids how to use health apps is one thing; why not take it a step further. We saw the news this week that HCA is buying (another) nursing school. Why? Because healthcare providers see the value in owning an end-to-end educational program for employees, especially in high-demand fields like nursing.

What is the value of end-to-end engagement with the general public? What if providers created educational programs for society at large? Why shouldn’t large healthcare organizations set up courses in schools and community centers to help people understand how the system works and how they can better navigate it? A health system that stepped up and put resources towards engaging the local community would garner a huge amount of credibility and trust. I could see this being especially powerful in rural areas, where people tend to stay in one place longer and average socioeconomic status tends to be lower and anything to help save money (or at least manage it more easily) will be valued.

It’s an investment, for sure. But let’s go back to those small bills that create such headaches for providers. How valuable would it be to have a community of people who just know that they’re going to be on the hook for $100, or $500, or even $1000 when they start an episode of care the way they know they’re going to pay $50 for an oil change or tip their server after dinner. Why wouldn’t a healthcare 101 course make a real dent in revenue cycle problems?

“We don’t know how the healthcare system works,” said one of my colleagues. It’s time for the healthcare system to start teaching us.

We don't know how the healthcare system works. It's time for the healthcare system to start teaching us. #RevenueCycle #RiseOfTheConsumer Click To Tweet

Agree? Disagree? Think I missed something big? Let me know in the comments below

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