Billing and payment system reformation: Applying lean principles and new technologies to improve patient experience

Fulkerson photo-2010
Jay Fulkerson, President, Chief Executive Officer, Health Payment Systems

As patients gain power as healthcare consumers, more and more industry leaders are turning their attention to healthcare billing and how the application of lean principles and new technologies can drive a significant shift in the patient experience. From my perspective, here are some of the key questions healthcare organizations should be considering:

Q: Why is reforming the billing and payment system necessary to the future of healthcare?

The current payment system is complex, confusing and wasteful. Patients receive enough bill-related mail to fill a shoebox! They receive explanations of benefits (EOBs), statements from specialists they don’t remember meeting, but no easy way to get their questions answered. In short, the approach is broken.

We need to rethink healthcare billing from the ground up if we’re serious about doing the very best for consumers. Providers often don’t realize or remember how important the payment and claims process is in shaping patient opinion, and how damaging it can be to their reputations if it’s mismanaged. Studies show patient satisfaction with their provider decreases 10 percent from the time of discharge to after receipt of the bill[1]. Health leaders must ask themselves, “How can we turn that around?”

The payment process is an opportunity to affirm the strength of the provider’s brand and mission, but very few are addressing it that way right now.“Payment” drives both physician reimbursement and patient billing. On the physician side, it affects your system’s reputation among peers, as well as your ability to recruit and retain.

In some cases, lean clinical improvements actually drive lower reimbursement because the current fee-for-service incentives are misaligned with delivering value. This needs to change. Ask yourself and your system: If payment isn’t reformed, is our model of healthcare sustainable and, if not, what partnerships or discussions can we have now to explore new solutions? What would it take to move to a value-based incentive program for our providers, based on lean outcomes?

On the patient side, What does our ability to provide transparent pricing mean for consumers? How can technology help us fill that gap? One place to start is around the billing cycle. Not necessarily the amounts on a bill – though that’s a reform goal too – but the time and energy it takes providers to create a bill, payers to process a bill and consumers to make sense of it.

Q: How can simplifying the billing process improve the customer experience?

We all want to differentiate ourselves based on the great consumer experience we deliver to our patients and their families. Lean principles have been applied with solid success in this space on the clinical side. Yet, the“patient experience” doesn’t end at discharge, and we’ve been failing miserably on the payment side.

It’s time to take lean to billing. If your organization is already practicing lean, consider doing a value stream map of the payment process – just like you look for waste and improvement opportunities on the clinical side, start to identify them on the payment side.

As healthcare leaders, we need to put ourselves in our patients’ shoes. We send them home with a handful of paperwork: prescriptions, after-care summary and follow-up appointments, pamphlets to further explain their condition. As they slowly recover, the bills begin to arrive in the mail but with no real organization.

The last thing a patient wants to think about is, How much did this end up costing me? Or, Why does this say “not a bill?” In one test case, an average family of four received more than 120 separate bill-related pieces of mail within 5 months. Claims technology streamlined that to 1 per month. The benefit of simplifying the billing process is not only ease and peace of mind for patients, but more control and understanding of healthcare costs and their own healthcare spend.

Because they have more financial responsibility for healthcare, individuals are naturally behaving more like consumers when making healthcare decisions. They want more information, more convenience and a higher degree of service. They want on-line access to schedule appointments and pay their bills.

Anyone who shops on Amazon and its ilk expects to see a range of options, ratings based on other shoppers’ experience, an easy-to-understand comparison of prices and features, and the ability to track a transaction from the moment of purchase to deliver. That level of service and individual control over the process has really changed people’s expectations, and they bring those expectations to healthcare.

Q: What role can technology play?

Like electontic medical records (EMRs) revolutionized medical records, claims technology has the potential to revolutionize payment. Today’s technology can streamline the payment process, close existing gaps or delays and better connect its components.

It can combine a family’s medical bills into a single monthly credit card-like statement, and it lets patients track how individual hospitals and doctors rate on cost, quality and by procedure. This kind of transparency is what people expect when they shop for big-ticket items in any other industry. They compare prices at multiple places to make sure they’re getting the best deal. Technology now gives them that option in healthcare payment too.

Care is increasingly delivered through an Accountable Care Organization (ACO) or other large in-network affiliated provider group. As coordinated as those organizations are when it comes to delivery, it often isn’t reflected in their billing processes. Technology can now synthesizes those claims – one bill for the patient, one claim number for internal billing offices and Human Resources (HR) managers.

More and more patients are paying claims through online portals, tracking their claim information with smartphone and tablet apps and proactively comparing expected costs from individual providers. What are you doing to give them those options?

Consider technologies that can “overlay” current business office systems without requiring a specific software change. Look for software that allows the provider and third-party administrator (TPA) to connect electronically, simplifying the adjudication of a claim.

Explore the uses of retail-focused technologies like Competitive Electronic Marketplaces. Instead of a provider-centric system based on paying billed charges calculated after-the-fact, Competitive Electronic Marketplaces (CEM) bring buyers and sellers together through an interactive, transparent online auction process, similar to the eBay model. For medication benefits, for example, patients can select the option that best fits their pharmacy needs from a price list of competing providers after inputting the necessary prescription information from their physician. It puts the consumer in control by allowing them to choose the brand name and cost, while safely tying results to doctors’ prescriptions.

Overall, when determining where to invest in payment technology, ask yourself two key questions: Does this simplify our patients’ lives? Can it save our patients (and us) money? The best solutions can answer yes to both.

Payment technologies also help support the “Population Health” approach toward which healthcare is moving. The latest claims tools and reporting metrics help provide an accurate, thorough picture of a patient population’s overall health claims and can further be customized to that population’s particular needs.

Because technology is putting more power in the hands of healthcare consumers, it’s opening the doors to larger discussions about payment improvements in the healthcare industry.

Q: What are the conversations we should be having right now?

The fact that stakeholders on all sides are now talking seriously about this issue is a huge step forward. We’ve seen some great innovative thinking and people who are willing to take a fresh look at the roles each entity plays in the payment process.

Challenges certainly remain. No one is sure where to play in the game right now, and that’s something we, as the collective healthcare industry, need to continue to work through. We need to shift our idea of competition in order to work together toward better value for patients and communities.

Be proactive. Look for opportunities to learn from and engage with people who are thinking about this differently. Small changes within the current framework aren’t going to be enough – you need to connect with companies who are reshaping the healthcare landscape for five and ten years down the road. Also, let your internal team know how important this is for your organization. The payment process is big and messy, and employees can be hesitant to change how they’ve always done things.

When engaging physicians or staff in payment experiments, ask them to think like a patient. Would they want their parents or neighbors to go through the existing payment process? No. It becomes a burning platform for finding new solutions. Lead by example and let them know they have your full support.

Forward-looking health systems are working to become more consumer-savvy. Where is your system headed?


[1]Data from 2011 Consumer Impact Study conducted by Connance

billing, CEM, claims, Competitive Electronic Marketplaces, EOB, explanations of benefits, Health Payment Systems, patient satisfaction, third-party administrator, TPA


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