What is Patient Financial Health Literacy and Why is it Important?
With the rise of high deductible healthcare plans and out-of-pocket costs, providers and patients are becoming more concerned with the financial component of healthcare. Increased patient responsibility calls for increased patient education on the payment process in order to improve patient collections as well as patient satisfaction. By focusing on increasing patient financial health literacy–which is defined as one's ability to navigate healthcare billing and financial responsibility–healthcare consumers will be more aware of the payment process, and therefore be more empowered to make payments.
Consumers with high financial health literacy would have a strong understanding of medical billing and are able to determine what's owed, what's covered by insurance, and available payment options. When patients don't understand a bill or the explanation of benefits, they become less engaged and less likely to pay. Organizations need to support and promote patient financial health literacy to foster a better patient financial experience, which in turn helps providers meet and maintain their bottom line.
The Need for Improved Patient Financial Health Literacy
Poor patient financial health literacy corresponds to poor patient collection rates and can even lead consumers to avoid pursuing care entirely. 1 in 4 Americans defer care because they don't know what will be covered, and fear not being able to afford the out-of-pocket costs. Patient financial health literacy is different from patient health literacy, which is one's ability to make sense of and use health information surrounding only the clinical side of care.
Despite new policies requiring price information be shared online, most healthcare consumers struggle to access or understand this information. Only 12% of patients had shopped around before a medical treatment or procedure, which illustrates the gap between offering price data and a patient's ability to utilize the information. Healthcare providers must educate and engage patients during the billing process in order to increase patient financial health literacy and, in turn, collection rates.
One of the main factors contributing to poor patient financial health literacy is the presentation and structure of medical billing. Most Americans are not well-versed in healthcare billing terms, which leads to confusion, followed by missed or skipped payments. 1 in 5 patients have stated it is unclear what is owed when they receive a bill, and 45% of patients said they want a clear bill that outlines the final balance that they owe. Poor billing practices impede the patient financial experience and slow cash flow, leading to an increase in bad debt and lost provider revenue.
Patient statements need to be composed in a way patients can comprehend, and should only include important information to simplify the payment process. Patient-centered billing prioritizes the patient experience, offering easy-to-understand billing terms, available payment options, and additional financial resources.
The Power of Patient Financing Programs
Offering flexible financing plans have shown to simplify the billing process and increase patient financial engagement. By implementing a digital patient-centric financing program, patients can pay their healthcare bills in smaller amounts overtime, giving them more autonomy in managing their expenses. 42% of healthcare consumers believe a payment plan would improve the patient billing process. Payment plans will also help to boost patient financial health literacy, as all the financial resources will be available within an easy-to-navigate patient portal.
In order to successfully roll out a patient financing program that promote patient financial health literacy, health providers must train staff on how to effectively communicate with patients. By having strategies in place that prioritize the patient financial experience, healthcare organizations will see a reduction in bad debt expense and a more stable revenue stream.
As patients continue to struggle to navigate the financial side of their healthcare journey, hospitals and health systems must place increased focus on improving patient financial health literacy. With 30% of provider revenue now dependent on patient receivables, providers can no longer afford not to optimize the patient financial experience. By utilizing a non-recourse patient financing program such as BridgeMed, healthcare organizations can simplify the patient financial journey, which empowers patients to pay and increases cash flow to the provider. To learn more about BridgeMed and its benefits, visit www.mybridgemed.com.