5 Key Payment Trends Healthcare Finance Leaders Need to Know

2022 has been challenging for healthcare finance leaders. Low patient volumes, high operating costs, staffing shortages and supply chain issues are straining resources and impacting bottom lines. A new report from The American Hospital Association says that over 33% of hospitals are operating on negative margins. While hospitals have seen some improvements in patient volumes, total costs are up compared to 2021, according to the July 2022 National Hospital Flash Report from Kaufman Hall.

In the second half of 2022, hospitals and health systems need to be thinking about strategies to improve efficiency and resiliency. Are there opportunities to reduce paper and manual processes with technology in the revenue cycle? What adjustments can be made to ensure working capital and liquidity strategies support growth in the treasury function?

Earlier this year, J.P. Morgan’s FastForward virtual forums identified five payment trends influencing how businesses across all industries position themselves for growth in 2022. Healthcare finance leaders can look at these payment trends to make decisions that impact their revenue cycle and treasury operations. Read on to learn about key payment trends for 2022 and what healthcare organizations should consider when planning for the second half of the year and into 2023.

Trend #1: Digital As a Culture

Businesses have been in survival mode for the past two and a half years, with operational and investment decisions focused on building resiliency. The next phase will focus on sustainable growth powered by digital technology.

The pandemic spurred digital adoption across industries. More businesses and consumers experienced the convenience and benefits of digital technologies leading to higher demand for electronic interactions. Many companies and consumers use digital technologies every day to perform tasks, communicate, and complete payment transactions. Digital methods and channels are now the preferred payment option for many consumers. A survey from McKinsey revealed that 82% of U.S. consumers used some form of digital payment in 2021, up from 78% in 2020. Digital has become ingrained in our culture and is expected to stay and grow in the future.

Takeaways for healthcare finance leaders:

• Digital payment experiences are the expectation and should be an integral part of your growth strategy.
• Healthcare organizations should take a holistic approach to digital payments. Ensure digitalization permeates and improves every aspect of your payment operations and patient experience.
• Implement solutions that remove paper and automate cash processes, whether payables, receivables or treasury. Some examples include accepting widely preferred electronic payment options, such as Apple Pay, and converting paper checks and correspondences from payers into digital files.

Trend #2: Anything As a Service

The growth of as-a-service models is driven by consumers increasingly looking for personalization, flexibility and convenience in their goods and services. Payments-as-a-service and banking-as-a-service models are rising in demand, especially as businesses seek to offer financial services solutions that can help to amplify client loyalty.

As-a-Service models offer customers product delivery and payment options that allow them to purchase access to products as a service. These models provide compelling benefits to companies that effectively deliver them to the market.

– Deloitte Insights

Takeaways for healthcare finance leaders:

• Payments are an essential piece of the patient experience. Paying a healthcare bill is often the last interaction a patient has with your organization, and it can make or break a patient’s impression of your brand.
• Consider payments-as-a-service when planning your patient experience strategy. Make it a goal to meet consumer payment preferences for personalization and convenience.
• Create a payment experience that increases stickiness by incorporating digital wallets, eStatements, text messaging and automation.

Trend #3: Payments as a Revenue Driver

With the surge in digital payments and payments-as-a-service, many businesses now view payments as a way to drive top-line growth. Payments can help businesses differentiate themselves from the competition, improve the user experience, and generate revenue.

Takeaways for healthcare finance leaders:

• Payments can be a differentiator in healthcare. Nearly half of consumers would consider switching providers for a better healthcare payments experience. Attract and retain patients with a payments experience that is simple and integrated into your patient journey.
• Healthcare payments are notoriously confusing and cumbersome. Many healthcare bills go unpaid because consumers don’t understand what they owe or how to pay. In fact, 73% of consumers are confused by medical bills. Make it easier for patients to pay by opening more payment channels and accepting any payment method. Reduce consumer confusion by delivering clear messaging through patients’ preferred communication channels and by personalizing payment options.

Trend #4: Improving Treasury Operations

As we settle into a new normal in the wake of the pandemic, businesses may have to adjust working capital and liquidity strategies to manage their stability and growth strategies.

Takeaways for healthcare finance leaders:

• Many healthcare organizations have not been able to rebuild patient volume and revenue to pre-pandemic levels. Treasury strategies should build stability to support lower volumes and ensure resiliency in uncertain times.   One recommendation is to focus on supply chain strategy to mitigate disruptions to working capital cycles.
• Focus on visibility, agility and resiliency. Improve access and visibility with centralized banking and reporting across your organization. Finding ways to consolidate business services so that you work with fewer vendors makes it easier to innovate and reduces risk.

Trend #5: Building an ESG Strategy

Environmental, Social, and Governance (ESG) considerations are at the core of successful business strategies today. Both consumers and employees care about ESG. 83% of consumers think companies should be actively shaping ESG best practices; 86% of employees prefer to support or work for companies that care about the same issues they do. With record numbers of people leaving jobs that no longer align with their needs and values, companies have to work harder than ever to attract and retain talented people.

Takeaways for healthcare finance leaders:

• ESG matters to patients. 60% of Americans say they have grown “more concerned” about healthcare inequities amid the COVID-19 pandemic, increasing to 74% among Black Americans.
• The healthcare industry continues to struggle with staffing shortages. ESG initiatives are an important recruiting and retention tool for talent.

Gone are the days when payments existed in the background. Payments are a differentiator and revenue driver and must be central to your business strategy.