The digital transformation in health care payments

John Welch: ©TrustCommerce

Health care organizations face a pivotal moment in the evolution of patient financial experiences. As patients are increasingly shouldering higher out-of-pocket costs, there is a growing expectation for the convenience and flexibility found in everyday retail payment experiences, enabling them to better manage their expenses. This shift presents both challenges and opportunities for health care providers looking to modernize their payment systems while maintaining security and compliance.

Understanding patient payment preferences is crucial for health care organizations navigating this transformation. However, the landscape is more complex than it initially appears.Recent research reveals an interesting disconnect between stated preferences and actual behavior in health care payments. While patients and providers both express a preference for debit cards (59% of patients say they favor them), credit cards actually dominate real-world usage, accounting for 47% of patient payments.

This disparity likely stems from the unpredictable nature of health care costs — patients might prefer debit cards for known expenses like copays but tend to reach for credit cards when faced with larger or unexpected charges such as deductibles or additional procedures. Also, some consumers are inclined to use a favorite “top-of-wallet” card for larger expenses –– often to gain additional benefits such as points or cash back. This behavioral pattern has pushed 96% of health care organizations to accept credit card payments, marking a significant shift from legacy billing methods, such as check and cash. However, simply accepting card payments is no longer enough to meet patient expectations.

The rise of digital payment solutions

The health care industry is witnessing a dramatic transformation in how patients want to manage their medical expenses. Recent research shows that 71% of health care organizations consistently offer patients the ability to store payment methods for future use, with over half of patients electing to save their payment information for future use when given the option. This trend reflects a broader shift toward convenience and efficiency in health care financial interactions as well as patients trust in their health care provider with their payment data.

More significantly, 69% of providers have implemented flexible payment plans to help ease patients' immediate financial burdens. This adaptation is crucial, as it addresses one of the primary barriers to health care access: variable upfront and unknown costs and the ability to manage large medical expenses over time.

Investing in modern infrastructure

Health care organizations recognize the need for modernization, with four out of five providers identifying the updating of billing and payment systems as a key focus area. This investment is driven by several factors:

• Patient Expectations: Modern consumers expect the same digital convenience in health care that they experience in other sectors
• Operational Efficiency: Digital systems streamline payment processing and reduce administrative burden
• Revenue Cycle Improvement: Enhanced payment options can lead to better collection rates and reduced bad debt

Security as a cornerstone

As health care organizations embrace digital payment solutions, cybersecurity has become paramount, particularly given the complex intersection of payment card security and health care privacy requirements. Research indicates that 48% of providers consider network security a top priority, though 77% find it challenging to address effectively.

Even seemingly minor details — such as mentioning certain words, or capturing payment data on a rarely used system can trigger complex and burdensome compliance requirements, creating a web of security considerations that affect multiple interconnected systems. Health care organizations must carefully manage how payment data touches and flows through their networks to avoid bringing numerous systems into scope for PCI compliance, potentially significantly increasing technology, operational, and financial overhead.

Omnichannel communication

Today's healthcare providers are adopting omnichannel billing capabilities to improve patient engagement and payment collection. The data shows that:

• 71% of organizations use patient portals for billing communication
• 67% send bills via email
• 60% notify patient of an invoice via text messaging
• 44% maintain in-person billing options
• 36% offer phone-based payment services

This multi-channel approach ensures patients can manage their health care expenses through their preferred communication method, leading to higher satisfaction and better payment outcomes. The strong adoption of patient portals (71%) reflects a broader shift toward online and app-based interactions similar to other sectors like banking and insurance, though providers must maintain traditional channels to serve diverse patient populations and maximize collection opportunities.

Looking ahead

The future of health care payments lies in creating seamless, secure, and patient-centered experiences. Organizations that successfully implement modern payment solutions while maintaining robust security measures will be better positioned to:

• Improve patient satisfaction and loyalty
• Reduce administrative costs
• Increase collection rates
• Minimize bad debt
• Enhance overall financial performance

Health care executives must recognize that modernizing payment systems isn't just about technology — it's about meeting evolving patient needs and expectations. As patients continue to seek retail-like experiences in health care, organizations that adapt will build stronger patient relationships and achieve better financial outcomes.

Strategic implementation steps

To successfully modernize payment systems, health care organizations should focus on five key areas:

1. Comprehensive Payment Support: Implement support for all major U.S. payment methods, including traditional credit/debit cards, FSA/HSA accounts, ACH transfers, and modern digital wallets like Apple Pay, Google Pay, Samsung Pay, PayPal, and Venmo.
2. True Omnichannel Experience: Create seamless payment experiences across all channels — online, in-person, over the phone, and in-app — to reduce friction and improve collection rates while meeting patients where they are.
3. Secure Payment Storage: Implement systems through secure payment providers that allow patients to securely save payment methods for faster future transactions, without requiring your organization to handle sensitive payment data directly.
4. EHR Integration: Ensure payment systems integrate smoothly with your existing EHR systems, working with leading EHR providers, ISVs, and SaaS providers to enable seamless transaction processing within established workflows.
5. Enhanced Security Measures: Implement Validated Point to Point Encryption (VP2PE) solutions to keep unencrypted card data out of your environment, enhancing security while reducing PCI-DSS compliance overhead.

By incorporating these elements into a comprehensive payment strategy, health care organizations can create more efficient, secure, and patient-friendly payment experiences. The result is stronger patient relationships, improved collections, and enhanced operational efficiency.

John Welch is Chief Product Officer for TrustCommerce