There’s no denying that reducing bad debt is at the top of revenue cycle leaders’ agendas. Patient liability has skyrocketed in recent years due to the rise in high-deductible health plans and erosion in coverage.
And many, if not most providers are being tripped up by these changes. The reason: Existing revenue cycle management practices are out of step with their patients’ new reality. They were never designed to accommodate sudden and dramatically higher patient liability.
The result is bad debt is rising, and the work required to collect it is damaging relationships with patients. But it doesn’t have to be this way. New thinking is emerging around contemporary patient liability management that pairs improvements to the patient experience with reducing denials and bad debt.
We invited two experts on the topic of advanced liability management to join us today on the Change Healthcare podcast: Raghu Bukkapatnam, Chief Strategist for Technology Enabled Services at Change Healthcare; and Bill Krause, VP of Digital Experience and Consumer Engagement at Change Healthcare. On today’s show, we cover:
- The consumerization of revenue cycle management (02:59)
- Providers struggling to meet consumer expectations, bad debt rising (6:44)
- The nexus of patient liability, consumer engagement, digital experiences, and collections (10:31)
- Gaps providers can close to reduce bad debt and improve patient relationships (17:29)
- Where the industry falls on the patient liability management continuum (24:55)
- Advice for providers facing resistance to change (28:37)
- Risk and ROI measurement for advanced patient liability management (36:16)
- Time to change: The patient liability management countdown (41:17)
- Examples of successful patient financial experience transformation (46:52)
- Bio: Raghu Bukkapatnam
- Bio: Bill Krause
- Infographic: How Patient Liability Management Helps Improve the Patient Financial Journey
- Improving the Patient Financial Experience and Maximizing Patient Collections
- Change Healthcare Introduces the First Patient Liability Solution to Help Improve the Entire Patient Journey
- Contact us
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RICH LEVIN: Welcome to the Change Healthcare podcast. I’m Rich Levin. There’s no denying that reducing bad debt is at the top of revenue cycle leaders’ agendas. Patient liability has skyrocketed in recent years due to the rise in high-deductible health plans and erosion in coverage. Many, if not most providers are being tripped up by these changes. The reason? Existing revenue cycle management practices are out of step with their patients’ new reality. They were never designed to accommodate sudden and dramatically higher patient liability. And the result is bad debt is rising and the work required to collect it is damaging relationships with patients. But it doesn’t have to be this way. New thinking is emerging around contemporary patient liability management that pairs improvements to the patient experience with reducing denials and bad debt. We’ve invited two experts on the topic of advanced patient liability management to join us today on the Change Healthcare podcast. First up is Raghu Bukkapatnam, Vice President of Strategy for Technology Enabled Services at Change Healthcare. And joining Raghu today on the panel is Bill Krause, Vice President and General Manager of Digital Experience Solutions at Change Healthcare. And now here’s Raghu and Bill talking about advanced patient liability management for providers.
RICH: Raghu, before we get started, tell folks a little bit about yourself, a little bit about your background, and what you do at Change Healthcare.
RAGHU BUKKAPATNAM: Absolutely. I lead strategy for one of the business units within Change Healthcare. There’s three business units and the business unit that I work in is called Technology Enabled Services. As the name suggests, I serve a group that primarily focuses with providers—both hospitals, health systems, but also physicians as well—to help them meet some of the challenges that they face within revenue cycle and revenue cycle management. So big focus on revenue cycle. Prior to my time at Change Healthcare, I was with McKesson. Prior to that, I was with a company by the name of The Advisory Board Company, which has since been bought up by Optum.
RICH: Great. Welcome to the program and thanks for joining us today. Bill Krause, you’ve been on the program before. But for folks who perhaps haven’t listened to that show yet, and I would encourage everybody to hit the podcast and look for our program on price transparency that aired recently. Very popular show. Bill is the guest. Bill, just give us a quick update on your role at Change Healthcare.
BILL KRAUSE: Certainly. I’m a Vice President and General Manager of our Digital Experience Solutions. And I focus on a wide variety of consumer-oriented solutions to help our customers with this shift towards more of a retail healthcare environment.
RICH: Great. So we’re here to talk about patient liability management today on the Change Healthcare podcast. And before we get into that topic, if we could just back up a little bit and look at the industry landscape and talk about how the business of revenue cycle management has evolved over just the past few years. Raghu, Bill, either one of you can take a stab at that.
RAGHU: Sure. I’ll kick us off and then and, Bill, please chime in. I know we’ve been working a lot on these challenges within our current roles and obviously in prior roles as well, so you definitely have a perspective on this as well. But I think, quite frankly, the topic that we’re talking about has a lot of big changes. It’s a pretty notable shift that’s been happening across the last decade. I’d say patient liability management, or the fact that patients within American healthcare, that we owe money to the providers that we see to receive care is not a new thing. It’s certainly been around. But I think what we’re starting to see more and more is this tipping point around patient obligation and affordability within healthcare. I think when you take that and then you couple patients’ expectations that they’re getting from other industries around transparency as you mentioned, Rich, around the ability to make and receive information regarding their financial obligations before their care all the way to the back end of the process. In terms of affordability, I think this has been a change. And I think when you step back, the problems that provider revenue cycle has been really focused on has been on denials and underpayments and managing really the payer of B2B type models. So you’re a health system. You maybe have four, five, six large contracts with payers. And that’s what they worked to optimize. But now you layer in patient liability and you’ve taken a model that’s really optimized around a B2B approach to a much more B2B2C approach. That consumer, that individual with all those expectations shaping their decision making. I think that’s probably what we’re seeing and hearing from CFOs. I know, Bill, when we talk about this, we talk about the consumer as I guess this person or thing that now has those same expectations. I know you’ve done a lot of work here on that piece.
BILL: You know I look at it and the revenue cycle if you think about it broadly, it’s defined around the management of the medical claim. All of the data needed, all of the processes, the training, capabilities, everything around developing, submitting, following up, and really processing that medical claim. And now, when you look out at the market and that certainly remains true and will remain true, but when you look out at the market, increasing number of patients are paying for their medical care and an increasing number of health systems now are in a position where patients are the primary payer. And so, for that segment of the population rather than the medical claim being that fundamental unit, I think increasingly health systems are going to orient their processes where patients are out-of-pocket and responsible for their payment around different units, different measures that really cater to and appeal to the patient’s liability. And you think about things around what drives successful completion of the patient financial experience, those things are different than what drives success for managing a medical claim.
RICH: How are providers dealing with these issues? How aware are they of this shift? They hear a lot about consumer engagement; are they making the connection physically and from a business process standpoint? Or are they struggling in this area? And I would venture a guess that they’re struggling in this area certainly from the standpoint of looking at the balance sheet and looking at their accounts receivable, looking at rising bad debt, concern about the relationship between the provider and the patient in terms of having to actually done them for their obligations. What does the landscape look like from the provider point of view? What are they experiencing and are they struggling?
RAGHU: I would definitely say they’re struggling. Again, we’re speaking in platitudes. There’s obviously hospitals, health systems, physician groups that are doing a good job on this piece, managing the consumer from, in all shapes and forms, from a financial perspective but also from a more broader patient experience perspective. But I think in general, you look at the data, you know bad debt you’re absolutely right, Rich, it continues to increase. Not-for-profit health systems operate on tight margins. And so hitting a 3, 4, 5% bad debt as a percentage of net patient revenue has real implications for decisions that they have to make for investments or bringing on new service lines or investing in new technology innovation. So I think from a bad debt perspective, folks are aware of it. I think to your point though, the solution is not easy. And, again, that shift from, hey I’m optimizing six payers to now I’m optimizing thousands and thousands of patients and the ability to deal with patients is hard. Just from a bandwidth perspective. Imagine how many times or imagine the last time you got a hospital bill or a physician bill and you look at it and scratch your head. I’m in the industry and I have a hard time understanding these bills. And then imagine you’re a lay person who’s not within the healthcare industry getting these bills and all the questions that they have and all the paper they get. You get the explanation of benefits, you get a bill, you get a charge, you get several physicians perhaps are sending you bills as well. So it’s not an easy thing to solve. I want to make that clear from our perspective. It’s not an easy thing to solve. I think the lack of consistency, the lack of the ability to use other tools from out of an industry has not made its way into healthcare. But we’re starting to see that turn. I think as you increasingly speak with CFOs, VPs of revenue cycle, they’ve come to the realization that the revenue cycle now is the front door to that health system.
BILL: I would agree with that. I think and there have been some recent surveys showing that the majority of health systems realize that that consumer experience needs to be a top priority for their organizations. But the tools and the processes underneath that are only beginning to be put in place. And there’s a long road ahead of us to Raghu’s point, it’s complicated in healthcare. It’s not the same as other industries. But those connection points need to be made in order to be successful. You think about things like the fact that the majority of patients just struggle to manage their bills. They lose their bills. There’s so many aspects of the consumer financial experience in healthcare that have a long way to go.
RICH: So is patient liability management a new idea? I know Change Healthcare made an announcement recently, we’ll have a link to that announcement in the show notes, folks. Just scroll up the show notes and you can tap that on your smartphone, it’ll take you to the announcement, give you all the details about that. I know we refer to it as advanced patient liability management. That sort of tells me that patient liability management’s been around and this is a new way of looking at it, or a more evolved way of looking at it. How does it differ from what I would call traditional patient liability management? And how do you separate consumer engagement and digital experience from patient liability management? Is patient liability management the super structure? And consumer engagement is part of that? Take us through that conceptually.
RAGHU: It’s a good question. I think it’s the right question. I think the patient liability management is the problem. That is the job to be done with our providers. When you look at response and how folks have been managing patient liability, it’s a pretty disjointed process. Again, largely because of the challenges that we just talked about. So it’s an overarching problem too. You can’t say, oh I’m going to work on the front part of my revenue cycle or back end of my revenue cycle and fix it. It’s a problem that manifests itself from the very, very beginning, again, that front door as I mentioned, all the way post-care, post-delivery, even up to six months, a year post-care. It’s this long process. It’s a complicated process that has various actors in play. You’ve got everything from an insurance feature or function. You may have an insurance feature or function that is not yet known, for example. An individual could walk into an ER and be eligible for state Medicaid, but just haven’t gone through the process of actually filling out the form. So they present as a true self-pay patient. But then become a Medicaid patient. All the way to the back end where you’re waiting for a claim to be adjudicated by a third-party payer in order to understand what the deductible or co-insurance, so out-of-pocket math and so on and so forth. And depending on where a bill drops and where a bill doesn’t drop and what provider is in first, this is a complicated, complex process. I think for most health systems, they’ve focused on bits and pieces of this. What I say with patient liability management is there’s two things. There’s the hallmark of advanced patient liability management as you put it, Rich. One is the integrated nature. This is not something that could be point-solutioned out. It’s got to be comprehensive. It’s got to be integrated. And the second is to have the campaign-like mentality around engaging with the consumer. You want to take up that piece of the solution
BILL: Certainly. And to add to a little bit more color to Raghu’s point on the integrated nature as well, if you think about broader transformation, what drives that value is a common integrated platform that can share data and can manage across touch points. I’ll give you a quick example here. You think about things like the process to apply for a mortgage and that process typically runs through many different departments, different silos, different point solutions. It’s a good analogy to the patient financial experience at some level. Then you take a look at some examples in the market. Quicken Loans, for example, rolled out a solution, Rocket Mortgage, and it manages, simplifies, and streamlines that process dramatically because it connects together data and silos. And those types of solutions that really show the ability to streamline an overall experience are where the industry needs to go. Then to Raghu’s second point around engagement campaigns, part of making that successful is being able to account for differences across patient and consumer needs in a systematic and scalable way. Our view on this is that health systems need the ability to manage two very specific segments of the population—segments of patients that have different financial needs—and to be able to use digital tools and services in a way that can be packaged together and can appeal to the unique needs of those patients, make it better, improve the overall experience.
RAGHU: Okay, Rich, just a little more follow on that statement made around Rocket Loans and Quicken which, got to love their commercials. If you take that and you use the analog within healthcare of charity care. So all not-for-profit health systems have some sort of charity care policy and processes that are followed. Basically it’s trying to assess based on various criteria, but federal poverty levels is one of them, whether an individual would qualify for the health system’s charity-care policies. So that process, there’s a lot of information that needs to be gathered and needs to be provided to the health system. There’s some presumptiveness that some health systems employ, but for the most part there’s still some additional information that needs to be verified. And it’s not that dissimilar from applying for a loan or applying for a mortgage. It is similar types of information around income verification, applicant verification, and so on. Now you take that process and you look at that process at, I don’t know, I’d say 80%, 85% of health systems, it’s a manual, paper-based process. You’re taking that information and oftentimes, eight out of 10 times it’s going to be manual and paper-based. In fact, we were at one health system and it gets mailed out. Forms are getting mailed out. So that’s a problem. When you think about the patient and the individual and that process, it’s not easy. It’s not easy to manage. There’s questions around it. And it can be streamlined. It’s a potential efficiency gain for a health system that can streamline it. It takes paper and makes it into data. Again, which allows for a more streamlined process. But I thought that that process is a perfect analog to what Bill was saying with the mortgage. Here’s the same thing basically and yet we’re still paper-based when the digital tools are out there and we just need to start to think about how to incorporate them into the workflows of hospitals.
RICH: The Rocket Mortgage example is a great example from the digital engagement perspective. Going back to the top of our conversation at the beginning of the show, Raghu, where you were talking about how the overall management of the revenue cycle has been a B2B process and now it’s B2B2C. I had actually written that down and I thought I was going to ask you, isn’t this now B2B2C and then you beat me to it. You said it. That’s the differentiating principle here that takes it into a whole other dimension and gets to the “healthcare is hard” part compared to Rocket Mortgage, which is very consumer-facing. It’s not the same. So, it really is a new way of thinking for healthcare that puts the patient journey at the center of revenue cycle management process. And when we look at the patient financial journey as a central organizing principle and you talked about the gaps and you talked about how some of it’s paper-based, some of it’s digital, and really it’s not holistic. It’s not streamlined. It’s not end-to-end. It’s a bumpy road. What are the common gaps you see in provider organizations that need to be closed to go from the way they’ve been doing things yesterday which is not solving the problem, which is not reducing bad debt, which is not improving their relationship with the patient. In fact, it may be damaging it. What are those gaps that you commonly see that should be closed and how do they close them?
BILL: Well let me start that one because if you look at the evolution of consumers, how they purchase, it’s really the e-commerce experience. It’s one important plank to this. So what I mean by that is as increasingly consumers are paying for their care out-of-pocket, they want the same, easy to use, simple transaction processes that fill the rest of their lives. And bringing those to healthcare starts to shift that focus, that B2B2C focus more towards pre-service. It begins to involve things like price discovery, and transparency, shopping, purchase, simplified transactions, moving money. A lot of these factors that can happen in the background and make it much easier for a consumer to go through a transaction process. So I think one of the planks and something that’s missing broadly in the market is that more e-commerce like pre-service experience.
RAGHU: Absolutely. I think when you think about that e-commerce experience, what do we expect from the Amazons? The Googles? Any of those that we interact with. We expect consistency. For me, when we look at and again when we audit and assess and we talk with hospitals and health systems and look at their interactions with the patient, they lack consistency. They lack a consistent message and a theme around what the health system is trying to do, which is provide obviously top-level, top-notch clinical care with the expectation that there’s some sort of a patient liability, patient obligation due as a result of receiving that care. Obviously these big organizations have very strong missions and values and you see that when you interact with the health system. But the lack of consistency hurts them. It hurts them from a collectability perspective. It hurts them from a patient satisfaction perspective. Again, just go back and just rewind and play back your experiences with hospitals, health systems, physicians, and just the disjointed nature of that entire process. There’s no concept of transparency. Very few people, very few health systems will give you a price quote that’s not just based off of charges, but actually based off of your insurance plan. You’ll see different policies being applied in different ways based off of who the registrar might be in terms of the collections process. So on and so forth. So for me, the gap is consistency. I think when I hear e-commerce, I think of consistent application. I think I know what I’m going into. I know what I’m getting and I know it’s not going to come out on the back end. And so that’s what’s lacking. There’s also just a shortage of communication, quite frankly. You buy stuff online, you buy a service online, there’s a whole host of communication that happens before the order is placed, after the order is placed, and then even in that delivery process, for example, if it’s something that’s coming through the mail or through FedEx. When was the last time you had care and you got an email confirming any information around your financial obligation? It just does not happen within American healthcare. So I’d say those two for me are the ones that pop and spike to the top of the list.
BILL: Well and to that point, it really makes paying for care much more complicated than it needs to be which goes back to your point earlier, Raghu, about that overall integrated financial experience. One consumer moving through that experience at different stages, many times it may be an unpredictable cost. And having the education materials, having the consistency of communications really does support making it more understandable for that consumer.
RAGHU: That’s a great point. I think this concept of financial education is really important. And I think you talk about health systems, they say oh, it’s not my job. That’s the health plan’s job. They should be educating their customers about the benefits. And they might be right. But it’s not happening. It’s not happening. So you’ve got this just big hole in the industry really about financially illiterate healthcare consumers. They don’t know. So I think when we talk about in the industry around patient financial education, there’s a broad type of education that has to happen. There’s the middle, as you think about it. And then there’s the very specific that also has to happen that’s tailored to an individual. And across all three, that broad, a little bit more detailed, and then very specific and individual I think the industry—and I say the industry as whole, not just providers—but plans and everyone else it’s a really big shortcoming with the industry. You know who’s gotten it right though, if you think about it? The drug companies and the pharmacy retailers and system and the infrastructure that they built in. You can walk into a pharmacy and they can tell you how much it costs. But obviously there’s some challenges with more complex care that’s provided at hospitals, health systems, medical offices, which complicates the situation. But again, that’s where that other types of financial education, the broader financial education has to come into play along with the very specific and tailored.
RICH: If you had to put healthcare on a continuum, let’s say a scale of one to five, five being all the jobs have been done, one being none of the jobs have been done in terms of achieving advanced patient liability management, this experience that you’re talking about, this unified, seamless, informed, contemporary digital experience for the consumer/patient. You’re out in the field all the time. You’re talking to providers. You’re seeing implementations. You’re helping them solve problems. Where do you think in your gut, where would you say the industry is on the continuum? Bearing in mind that a low number really just isn’t necessarily an indictment. It’s just a statement of opportunity.
RAGHU: It’s funny Rich, we actually asked this question in our meetings. And we don’t put it on a five-point scale, we put it on a four-point scale. So with one being “haven’t done much” to four being “exactly how you described it.”
RICH: I can go with the four-point scale. I’m good with that.
RAGHU: So it falls between a one and a two. And some people will be like, I’m a 1B, or closer to two but we’re in the one. Again, I’ll stand by what we said, this is not easy. You’ve got a lot of actors, we’ve got a lot of complexities, you’ve got a long-time process. It’s not easy. And then like Bill said, some of these digital tools, they’ve got to be adopted as well. So that’s what we’re hearing pretty much to a tee. Wouldn’t you agree, Bill? You’ve been in those meetings as well.
BILL: I would agree. What I typically see are the hospitals and health systems focusing on tightening up their individual department and process-level capabilities to manage the patient live financial experience, and really are only beginning to think about an integrated end-to-end approach to that. So I would most certainly say health systems will readily raise their hand and say they’re on the beginning end of that spectrum. And I think a lot of systems are looking for examples of what is leadership and what does good really look like, particularly on the digital side? Really just beginning a process of understanding what can be brought into health systems. A lot of times our customers will be quite focused on enabling basic self-service capabilities. Enabling the payment through a portal or another self-service capability. Rarely do we come across customers that connect these together into an integrated patient financial journey. But that’s the opportunity, and frankly over the next number of months and in the near term that’s the imperative because as we’ve said at the start more and more of healthcare is being paid for fully by patients.
RAGHU: Rich, you’re not going to get payment if you don’t have an engaged patient. If that patient is not engaged in the process from start, they’re not going to pay. That correlation exists. It’s, I think, this is the challenge is that you’ve got to couple these two screens together. Engage the patient, educate the patient, and then there’s that expectation I think that’s been built around payment.
RICH: And so you’re talking about really moving from a tactical approach to a strategic approach. But given that this is such a new way of thinking and operating, what advice do you have for providers who hear this conversation and the lightbulb goes off and they want to try to affect change in their organization and be a catalyst for that change? What advice do you have for them in terms of obstacles they might need to overcome such as culture change, new workflows, a redefinition of patient engagement, thinking of it in terms of the patient financial experience as opposed to liability management. What’s your advice to those innovators, those change agents that really are the people that are going to be the ones that make this happen and get it started in these provider organizations?
RAGHU: Can I say all of the above? I think if you were to put a graph together, a chart together, you’d have a bar right on the left and a big bar on the right that shows improvement. I think what you’re going to find are a number of small bars in between. In other words, the waterfall graphic on this, you’re going to see a lot of things which is positively speaking but 1,000 cuts really. You’re going to find a little pocket here, a little pocket there. I think that’s generally where you’re going to see. I think if you had to say though hey, what are the two or three things that pop into my mind? One: know the data. I think health systems have a hard time accurately being able to communicate what the opportunities actually are. And some of the legwork needs to be done around mapping. Obviously cash collections is known, but then going that next level down around triaging and really slicing and dicing the payments data to understand how you’re getting paid, on what type of balances, for example. Getting a baseline on what the collections are from a potential opportunity. The question we ask and again you’d be surprised at how many folks don’t really have a good handle on it. The first would be not surprising to me, data. But get the data. Cut it. Slice it. Dice it. Analyze it to help you uncover specifics around your population, your performance.
The second for me is financial education. I think it’s huge. Like I said, it has to be ongoing. It has to be at a number of different levels. A well-educated patient is going to be well served, I think. From a health system perspective, but also from a patient engagement perspective.
I think three is the one that Bill’s talking about which is digital tools and digital concepts. I’m amazed at the amount of workflow that exists within health systems around some of the core processes. And so streamlining those workflows. Cleaning them up. Leveraging technology will help prioritize those workflows much better. I think that will obviously allow revenue cycle staff to focus on that next [level] of work that is not being done right.
RICH: Bill, what’s your take on that question?
BILL: Well I think Raghu covered really the fundamental pieces here so I’ll add a little bit of color on this. First of all, framing the patient financial experience and patient liability management in the proper business impact terms. What I mean by that is certainly the collections level and bad debt and associated core metrics with patient collections are first and foremost. But the business impact extends well beyond that, related to the decisions to pursue follow-up care related to the ability of that health system or hospital to attract or retain patients related to the hospitals’ value proposition to employers and health insurance companies in their market. The patient financial experience has an outsized impact on those relationships and that business value. So it needs to be looked at in that proper context. Then on the other side, I would also add that health systems should begin to look at the friction points and really systematically map those for their patient financial experience. And take it from the start, prior to service. Every entry point that a patient enters into their financial responsibility and financial experience whether it’s off of a referral order or a brand new patient. What are the tools and processes that are put in place proactively and to make that as seamless and as efficient as possible for that patient? Because those patients want to spend as little time as possible going through revenue cycle and patient financial processes. So what are the tools that are brought to play to take away those friction points? To automate data sharing? To instead replace it with financial education and the information that patients want to help them through that process. That is what needs to be looked at in order to really drive the needle in this overall transformation.
RAGHU: The focus tends to be in these conversations about patient liability. But the reality is there’s a whole other dimension of that patient relationship in terms of they’re going to want to use your organization more because the experience is better, is more contemporary, for the same reason that they may want to use Rocket Mortgage because it’s easy compared to some other process. You will retain that patient relationship. You will perhaps even expand into more of their family when they have healthcare needs. The actual truth of the relationship beyond the financial piece of it, the actual healthcare relationship with that patient gets better.
BILL: You know that is a fantastic place for health systems to really look and to think about the value here. And to your point on Rocket Mortgage, what we see in the market is that oftentimes it’s not about the actual product or service delivered, but it’s the consumer experience, the transaction process that surrounds it. So I can tick through lots of different examples of companies whether it’s Amazon’s new Go where as a consumer you can go in and basically take items off of the shelf and walk out and the transaction process will happen. Or Rocket Mortgage or Venmo or Carvana or Hertz offers a program where through their ultimate choice you just walk up and choose the car you want and drive off. It’s not the product, but it’s that consumer process around it. And by the way, those companies and others that adopt that, they are growing massively. They’re winning in their markets. They’re showing outsized results from this. And we would say if you look at the patients’ financial experience and patient liability management, this is the opportunity for health systems to really take this process which has been a source of great frustration for patients and consumers, flip it on its head and use this as an opportunity to really build a leading position in their market.
RICH: That’s really a great articulation of it. It is a competitive edge in a competitive marketplace any way you want to look at it. And at the end of the day, everything is a business and if you are serving whoever your end consumer is and recognizing that the patient is more than a patient, they are also a consumer today in this digital era it’s transformative conceptually as well as for the experience for the consumer. I’m getting to probably some of my last questions here and one thing that I want to hit is, so I’m one of our listeners. I’m putting myself in the listeners’ shoes. This is really enlightening. It’s informative. I’m realizing that you know what, we are thinking tactically, we need to think strategically. I can see how this works. But we’ve said multiple times, this is a big problem. It’s complex. A lot of tools need to be brought to bear. Is this a process that can pay for itself? What’s the risk to providers of going this way versus doing nothing at all? I guess we’re balancing two things there. What’s the end game? What’s the ROI? Can it be measured? And what’s the risk of not moving forward into this new era?
RAGHU: The ROI is absolutely measurable. It’s measurable across two dimensions. One: bad debt. Patient collections. Bad debt going down. Patient collections going up. The other dimension is around patient engagement and satisfaction. I don’t think you can ask for two more better, quite frankly in my opinion at least ROIs, for a hospital or health system. Maybe you should go start in physician satisfaction, which also probably has a role to play here because it’s oftentimes the physicians that hear from their patients about a bad process, a bad patient financial experience. So you even probably go that route as well. But I’d say from an ROI perspective, absolutely can pay for itself across those two dimensions. I think the risk is real. The risk is real. You’re taking the chance of if you pursue inaction here, you’re going down a path of two things. One, I don’t think there’s any shortage at least of the reports in the prognostication reports that I’ve seen, there’s no downturn in pending future around patient liabilities and what we owe. The days of having first dollar or whole dollar coverage are gone. So I think everyone can except $10-, $11-, $12,000 deductibles, out-of-pocket maximums and what not. So that’s not going away. That pressure point is not going away. Reimbursement as a whole continues to be put under pressure. The margins are only going to get tighter for providers, not the other way around. And so I think the risk of inaction is pretty real from a financial perspective. And then, honestly from the patient’s perspective, we’re not doing right by them. Sending a $10,000 bill without any communication upfront from my perspective, my opinion, it’s not doing right. And so there’s a very real piece that’s important. And to your point, Rich, Bill, you just made the comment there’s going to be health systems that are going to be innovators. There’s going to be health systems that do figure this out. And they will have that relationship. And those relationships become sticky when you have good experiences. Again, tons of examples from out of industry that we can point to. And so if you’re a provider and you’re in a competitive market, this can be a competitive differentiator for you and how you interact with your patients.
BILL: We spend a lot of time working with patients and doing ethnographic research and other things to really inform our perspective here on the patient liability management and financial experience, and one thing that we would point out to your question, Rich, is that increasingly the demographic shifts and the buying power and decision making is shifting to younger generations. We often hear about millennials and their expectations and they really will begin to drive a larger share of healthcare decisions. And their expectations are dramatically different from the expectations of current generations that are making these decisions. So we look at this and say it’s an imperative to get on this path towards transforming the patient financial experience. It doesn’t mean that it has to be transformed singularly in one motion. But health systems have to begin to adopt the practices and the principals, the end-to-end approaches necessary to land in a place that will keep the business model healthy.
RICH: I’m going to put you both on the spot. How much time does the industry have? We talk about millennials, Gen X, and their transformative experiences. You can see the impact they’re having on fundraising in political campaigns where $1 social media contributions are filling the bank accounts of leading candidates who are not taking corporate donations at all. It’s transformative. How much time do you think the industry has? And I’m looking at all those folks that are on the bench. When should they get off the bench?
RAGHU: That’s a good question, Rich. For us, I think generally, the complexity of this is not an overnight thing. I can’t stress that enough. But in general I think you’ve got [a] three [year]—maybe a little bit more, maybe a little bit less—window to get this done. I think that’s when you’re going to hit that tipping point both demographically but also financially as well.
RICH: Bill, what do you think?
BILL: Well there certainly are external factors, regulatory agendas, policies. There’s been a lot of action in Washington DC to spur more consumer-friendly approaches to the patient financial experience. So those sorts of motions could have a very dramatic impact on the market. But not withstanding that, from a demographic standpoint and from an overall trends standpoint I agree with Raghu. I think we’re looking here at really in the next three years needing to have these tools and processes firmly rooted within health systems because in reality, and health systems know this well, their margin of operations is very tight. They’re under strong margin pressures. So small improvements can have major differences for the overall health and stability of healthcare providers. When you look at the demographic shift, I think you can look no further than around 1998 and the rise of e-commerce and Amazon as a bookseller that the brick and mortar organizations poo-pooed. A lot of them took a wait-and-see approach. Some of them got it early and started to move. Amazon went out there and started to sell for other retailers. Handwriting was on the wall. Now they sell anything. You can find anything on Amazon. And that shift left a lot of organizations—I would say most—behind. And a whole new generation of innovators appeared. And I wonder if that’s also part of the potential fundamental seismic shift that potentially could be happening in healthcare. And if they’re not paying attention to that, it’s lead, follow, or get out of the way.
RAGHU: Oh yeah. I think the basis for health systems and providers in general has always been centered around clinical quality, or should be. That’s obviously the critical piece here. But I think increasingly you’re starting to see these types of patient-experience-driven activities and solutions. You can start to take over the market. And again, to Bill’s point you can’t think of these markets as monoliths. They’re not monoliths. But if you start taking away for a health system, you start taking away 5% of their volume, now ask the CFO or the CEO what’s that going to do to their business. That’s a sizable amount. And so you’ve got to start thinking about these industries and these segments really in that kind of light. What happens if you do take away this portion or that portion? Or the millennials now make up 10% going to 15 and eventually to 20% across the next three to five years. What does that do if you’re able to capture that? And I think those are the questions when we sit down with executives from hospitals, health systems, the industry as a whole, those are the questions that I think cause people to pause. Because if you can play on those marginal areas, you can have a pretty big outside impact. Then it starts to grow exponentially and exponentially and exponentially. And you’re not talking about 5 or 10% but you’re now talking about 50 or 60%. When that becomes the norm in a particular market, the market’s redefined itself. You know we’re working hard to help our providers prepare for and succeed in this new environment, but the disruption recipe really is in place now if you think about it. Over 80% of consumers are dissatisfied with their healthcare experience. Almost half of total healthcare spend under employer-sponsored plans is shoppable. We’re not saying people are shopping for it, but it is shoppable. Nearly half of healthcare decisions will begin to be made by millennials over the next couple of years. And a significant portion of the healthcare spend is out-of-pocket. This is the recipe for this type of disruption. And so as we pointed out, what we’re not advocating for is a single shiny object put in place for the organization, but really a relook at the end-to-end financial experience and how to systematically improve that to drive patient loyalty, drive patient retention, and improve the bottom line. That’s the path that we’re advocating for here and really the time is now.
RICH: My final question for you both, do you have any examples that you can share, you don’t have to name names, but of wins or successes achieved through this process that we’ve talked about here? This transformation of the patient financial experience.
BILL: We’ve got some fantastic successes. As this continues to gain momentum in the market and the capabilities that we’re bringing to our customers begin to really get adopted more widely, some of our capabilities to help with the patient pre-service financial service for driving very high net promoter scores. In upwards of 80 to 90 net promoter score, which is dramatic for this industry. And a number of other areas that are really shifting the mark and addressing the needs of our consumers.
RICH: Raghu, what’s your take? Any evidence you can share? Again, we don’t have to name names, but just what you’re seeing in the market.
RAGHU: Absolutely. I’d echo what Bill talked about. Again, the metrics that we talk about with our customers revolve around patient collections and patient satisfaction. The comments that we’ve made around education and consistency. Those are the themes that we apply at our customers and encourage them to apply through various tools, workflow processes, what not. And that’s where we’re seeing a lot of improvement. An engaged patient typically will be more amenable to be a paying patient. And that’s kind of where it starts really. I made another comment earlier about charity care and charity care processes. I’d encourage the listeners to this who do work at a hospital or health system, look at your charity care policies. Go sit with your financial counselors and I think it’ll really open your eyes as to how much time is spent there on those processes that I would encourage you to think about. How can we automate? How can we get this such that we’re not spending so much time? And even the concepts of presumptiveness. How do we leverage that without some of the downfalls that we see [in] presumptive charity care policies? And just even that one application of a process embedded within again, the whole patient financial journey I think is another example where we’re seeing a lot of push. It helps remove some of the busy work and really focus on those value-added areas, elements, that actually drive again, performance against those two metrics. But yeah, absolutely. These are starting to see real signs of this moving in the right direction. Again, long journey though. I don’t want to minimize the amount of work that needs to be done because it is a lot. That one-to-four scale we answered, it’s kind of as one to two. I’d say that’s where the industry is really at. But they’re starting to be some really great examples that we’ve seen that are doing this right.
RICH: Folks, if you take a look at the show notes, again we’ll have a link to the transparency podcast I mentioned earlier on as well as the announcement around Change Healthcare advanced patient liability management that was announced recently. But there’s also in the show notes, a really interesting infographic that can take you through the vision that we’re talking about here for the industry of the full patient financial journey. And you can see how it’s being done in most of those organizations today, those ones and twos, and what it takes to get to the three and the fours in this single infographic. It could be a really educational and informative moment for you to take a look at that. So I encourage you to tap that link and take a look at it. Share it around your organization. Get that conversation going because let’s not forget all of these consumers, many of them, are dealing with really significant personal health issues when they’re going through this financial journey. And that’s really where the focus should be and everything we can do as an industry to make the financial piece of this as seamless and painless as possible is really what we should be focused on in addition to making people well. Gentlemen, anything else you’d like to add that I haven’t given you an opportunity to address in my line of questioning?
RAGHU: No, Rich. This was great. Thank you for the opportunity. Bill and I spend a lot of time together and we’re both very passionate about this topic and doing right for your patients, absolutely. But also making sure that we’re putting our best foot forward as an industry are really important points to make.
BILL: I would echo that as well. Our work is really to help our health systems take material steps forward in this area because we know it’s what our consumers and patients need and we know it’s what health systems want to deliver. And we’re there.
RICH: Thank you both for joining us today on the Change Healthcare podcast.
RAGHU: Thanks Rich. Have a great day.
BILL: Thank you.
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