B2B Payments

Healthcare Payments Prepare For Post-Pandemic Overhaul

The pandemic has highlighted the need to radically change B2B payments from insurance companies to providers — along with pretty much everything else in U.S. healthcare, David Goldhill, founder and CEO of medical services platform Sesame, told Karen Webster.

"What is interesting about [the COVID era] is just how much attention is being paid to public health measures, questions of access, questions of equity that I think will be with us for quite a while," Goldhill said.

When it comes to rebuilding the 21st century healthcare system, Goldhill said the cost of healthcare, and the use of insurance and consumer out-of-pocket payments to pay for it will be at the center of any effort.

“If we want to drive positive things in terms of value and customer service and lower transaction costs, we're going to have to rethink how we finance healthcare,” he said, calling the cost of healthcare “ruinously expensive” and “totally unpredictable.”

Of all the systemic flaws the pandemic has exposed, Goodhill said none are more apparent than the shortcomings of the current business model dominated by big providers, third-party payers and invisible blank-check-style pricing.

To the point, he said if the fundamental purpose of a payment system is to make sure consumers are able to get what they need at a reasonable price with low transaction costs, then the U.S. system is seriously outdated and due for an overhaul.

“We have the highest imaginable transaction costs for every possible healthcare interaction no matter how routine or predictable, and we've imposed these extraordinary transaction costs which exist almost nowhere else in our economy,” Goldhill said.

Hidden Pricing

While Goldhill said insurers are needed to cover some aspects of healthcare, there are better ways to go about it that would address some basic dysfunctions.

He said the cost of our care might be extraordinary, but the fact that we don’t even know what we’re paying for is even worse. And with more and more of those costs shifted onto consumers in the form or increasingly large household deductibles and co-pays, he said patients need to be able to control costs and shop wisely.

Unfortunately, Goldhill said that simple marketplace dynamics are utterly missing in the current system.

“When I go see a doctor and hand over an insurance card, even if I'm paying for all of it out of pocket through my deductible, I have just signed something that says, ‘No matter what you charge me, whenever you charge me for whatever you charge me, I'm responsible,’” Goldhill said. “We don't have anything else like that in the economy. Nor should we.”

How Do We Fix It?

Given the way we spend on healthcare, Goldhill said he would like to see more catastrophic policies in place to cover that small percentage of treatments that account for huge, unexpected expenses.

But Goldhill said he believes that the less healthcare we run through the insurance system, the more likely we are to see real value in terms of both prices and quality.

He said he believes consumers and providers need access to a marketplace like Sesame, which allows both parties to find each other and book every imaginable routine service for a fixed, upfront cash price.

Goldhill said providing upfront payment enables providers and clinicians to offer the best possible price, while Sesame’s competitive cash market is usually substantially cheaper than even the negotiated rates secured by large insurers.

Why Doctors Are Open To Changes

It’s obvious why consumers want to pay less, but Goldhill said there are also a number of reasons why physicians, clinicians and medical institutions should be open to changes, too.

First off, there’s the fact that by not taking third-party payments, practitioners will save 30 to 40 percent on administrative and collection costs.

“If you're saving that in expenses, you can offer this consumer a reasonable part of those expenses,” Goldhill said.

Secondly, there’s the reality that a lot of doctors don't love today’s insurance-based system given the complexity and hindrance to care that it places on normal doctor-patient relationships.

“[Doctors] don't love spending their time with patients thinking about preauthorization and insurance issues, and they don't love spending 5, 10, 15 percent of their own professional time working with insurers,” Goldhill said.

Which Consumers Can Benefit From A Different System?

About one-third of Sesame’s business involves providing care for people who have no insurance, whether that’s by choice or due to economic circumstances.

“The uninsured now are middle class,” Goldhill said. “People have decided they just can't afford health insurance. It's just too expensive for them, so they're cash payers for care.”

He said that reality makes offering patients the medical discounts that Sesame has — 30 percent to 50 percent off of the insurance price — highly motivating.

Sesame also caters to high-deductible households that are on the hook for the first $5,000 to $15,000 of their annual medical costs, which means they’re paying for basically everything except catastrophic events.

And then there are those patients who simply like the certainty and convenience that Sesame’s health marketplace offers rather than handing over a credit card and saying: “Charge me whatever you want.”

Everyone Seems Ready For A Change

“I think we are at a point now where the tolerance in America for our current healthcare system is very, very low”, Goldhill said. “And everybody's got a horror story.”

But he said the good news is that with patients and providers all getting used to the better performance, logistics, quality and accountability that digital services offer in other aspects of their lives, healthcare’s shortcomings stick out more. Goldhill said he believes that will be a catalyst for change.

He said the emergence of innovations like dynamic pricing — physicians setting their own prices or therapists bundling the cost of five or 10 visits — would be hugely disruptive to today’s establishment of providers and insurers.

“The future of healthcare delivery is that it will not be one size fits all,” Goldhill said. “The idea that there was a single answer for 315 million Americans at every point in their lives has been in mistake.”

 

For other programs in the month-long series of conversations on innovating B2B Payments, please register here. To see all prior programming on demand, please visit PYMNTS TV and the B2B channel.

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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