The No Surprises Act of 2020 took effect this January, putting physicians and health systems on notice that large, unexpected bills after the fact aren’t acceptable anymore — and leaving many providers wondering how this sweeping legislation will affect their bottom line.
This is a potential shot in the arm for consumer financing solutions that have proliferated in recent years, as installment plans and payment agreements provide patients who know what they owe with a way to cope with healthcare costs that seem to be rising exponentially every year.
As with most financing programs in the space, CareCredit works just like a regular credit card, as long as you’re spending on healthcare. With over 60% of Americans living paycheck to paycheck and inflation bearing down, it’s an ideal time for patients and providers to become conversant with the financing options available.
Starting out as DenCharge, a dental financing solution, and then expanding to CareCredit and today Synchrony Health and Wellness, Synchrony Senior Vice President and General Manager of Health Systems Shannon Burke told PYMNTS the company has quickly expanded to include adjacent health services — cosmetic, vision and audiology — and crossed over by 2018 to cover other specialties, along with primary care and now wellness.
Given the ongoing economic and health crises, Burke said the timing is ideal for hospitals and providers to adopt healthcare financing.
“If we just think about the fact that $400 billion will be paid out of pocket or is owed out of pocket, there’s massive opportunity for financing there,” Burke said. “We know that once you get over a bill of about $800, many people want the option to pay that over time.”
See also: Rebuilding Healthcare Payments on a Foundation of Wellness, Access and Affordability
The fact that more “care now, pay later” options are popping up demonstrates that there’s significant demand in the space. But by and large, she noted, there’s still a lot of work to be done to educate patients and providers on where financing fits into the conversation about how to pay for care.
For those facing extraordinary financial hardship, she noted that health systems and hospitals are required to provide safety net programs. But financing fits in where insurance leaves off and that kind of aid isn’t an option, giving qualified consumers a way to pay off big balances over time.
“Because the available market has grown to that $400 billion, it creates a big space, and an appropriate space, that if I’m financeable, I should be able to use that for bills that are significant that [I] either can’t … or don’t want to pay in one fell swoop,” she said.
Rising Demand
Given the press and attention devoted to America’s limping healthcare payments framework, Burke is amazed that financing still seems to be a novelty.
Try to remember the last time (if ever) that a physician or medical provider offered you a financing option at the point of care or through an online patient portal, and it gets clear quickly. For most people, the answer is “never” — and that will need to change if providers want to collect any meaningful part of that $400 billion.
With almost 13 million CareCredit cardholders now active, and with the company looking to scale in the future, Burke acknowledged that the total addressable market (TAM) for healthcare financing makes that figure anemic by comparison.
“That was largely driven by the specialty side that just was not covered. It was obvious that financing came into play,” she said. “It is [this] evolution that’s so important for people to understand why they need to consider a financing component. I recently found myself with a large out of pocket. It’s just what happens today, even if it’s not elective.”
Moreover, she said the dearth of payment options in healthcare, at least until recently, is inexplicable after the pandemic digital shift.
“If I find myself with a big bill, I want a way to pay for it,” Burke said. “I see [financing options] everywhere else in my life, and I should see it [in healthcare].”
Related: 33% of Consumers Have Opted out of Needed Medical Care Over Cost
When asked how the interested practice can bring financing into its engagement flow, she said they should start by figuring out how to integrate it into their staff- and patient-facing tech systems.
“You want to be able to offer patient financing anywhere a patient could pay and anywhere the provider can accept payment. Anywhere, from point of care to post care,” she said. “That just has to be part of the whole frictionless experience.”
And the sooner in the process, the better.
“It can’t be a surprise at the end,” she continued. “Lots of legislation is discouraging surprises. We want to know really early if we’re going to owe something so that we can start preparing for that.”
This is part of the larger trend of patients starting to think less like consumers of healthcare, and more like paying customers who educate themselves about available options and vote with their feet if they don’t want to pay for a test or procedure.
Trust in the Balance
As to obstacles in the path of scaling CareCredit’s 13 million cardholders, Burke told PYMNTS that there’s an awareness and education component that’s still in early days.
Having worked in healthcare financing for years, she nonetheless hails from a generation conditioned to think, “‘This is a conversation that happens after care with the back-office staff who I call on the 800 number.’ I have really shifted to the fact that this is a different conversation.”
Practices and health systems that don’t put financing options in front of patients and potential patients from the start are most likely taking money off the table for themselves — an iffy proposition at a time when healthcare is deeply in the red from the COVID-19 pandemic.
Read more: Buy Now, Pay Later Options Help Fill Dental-Care Gap
What’s more, Synchrony has found that talking about financing options up front creates a stronger bond between the newly-emerged patient-customer and providers, and that’s priceless.
“I often say, what’s the number one thing driving purchases? Trust. Trust in brand, trust in the person,” she said. “And again, I have been conditioned in every other part of my life to know what the costs are and not be surprised.
“I don’t pick up a pair of shoes at Footlocker and think it’s going to be $25, and they say you have to pay $150. It’s the same thing with healthcare. There’s so many forces that are driving this cultural shift of transparency.”
Beyond trust and the importance of getting unpaid medical debt loads off physicians’ and health systems’ balance sheets, she noted that the patient-customer is more likely than ever to quit a practice for one that’s offering payment options.
“I think 66% of consumers surveyed will change providers for a better financial experience,” Burke said. “The majority expect it. If I don’t get it, whether we’re aware or not, it undermines our trust. Then ultimately it will undermine our satisfaction. What providers have to keep in mind is that today, Shannon Burke will walk [to another provider] for a better experience.”
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