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Cash Payments, Deductibles and the Patient Experience

Executive Summary

  • Macro changes in healthcare mean that more patients are directly trading currency for care.
  • When patients pay more, their expectations of care change.
  • The Wall Street Journal is reporting a return to cash discounting for patients.
  • Patients’ disconnection to invoicing drives non-payment.
  • Coordination and thoughtfulness in invoice delivery increases percentage of payment revenue.

The New Playing Field

With the growth of high-deductible health plans and lower reimbursement rates, consumers are now responsible for a larger portion of their total healthcare costs. These changes have driven out-of-pocket costs up 11% this year, according to a study by TransUnion Healthcare. Hospitals and practices are becoming increasingly aware of the challenges associated with collecting the out-of-pocket responsibility from patients. As the industry continues to shift from a fee-for-service model to performance-based payments, physicians will see a greater portion of their earnings tied to patient outcomes, requiring them to explore new ways to engage, motivate and reward patients for choosing their practice. According to Patientco research, one third of physicians’ incomes and one-quarter of hospitals’ revenue is now tied directly to patient payments, creating significant pressure to optimize financial relationships.

Now that patients are paying more, they expect more. The healthcare industry is under increasing pressure to operate less like a traditional healthcare system and more like a retail environment. Patients are indisputably becoming more like “consumers” in healthcare, as the shift in financial responsibility is reshaping their expectations.

Patients shop for retail-grade healthcare delivery models.

A recent survey found that consumers are willing to abandon traditional care venues for more affordable and convenient alternatives. Despite the draw to follow their in-network coverage, those with choices will still choose a care delivery model that delivers the best value—not just on price, but weighing experience, environment and convenience.

The Wall Street Journal reported that consumers are starting to notice a new trend that practices are accepting payments well below their negotiated rates with insurance if patients pay cash. Traditionally, cash payments guaranteed higher cost than rates negotiated through insurance. While some medical practices don’t advertise such discounts, others see it as a way to compete, avoid collection hassles, and treat patients who might otherwise avoided care.

Strategic initiatives of best-in-class healthcare organizations include improvement of the overall value experience, reduction of bad debt, implementation of a consumer oriented strategy and preparation for patient satisfaction.

Tips from the Prada Handbook: Payment

The Prada-fication of healthcare requires a new focus. Patients expect shorter wait times, want to be seen after-hours and on weekends and be able to pay their bill in a way that is most convenient. In short, consumers look at paying a large bill in the same way they would pay for a high end consumer good.

Healthcare delivery models are reorienting themselves toward a more “patient-centric” experience, which builds a strong word-of-mouth reputation. The location matters. The layout matters. The greeting matters. Even the smell of the office matters.

But the financial experience is just as critical. This often overlooked component of a hospital’s patient engagement strategy is one that can provide organizations the means to improve the experience of care, increase revenue and gain a competitive advantage.1 While it’s up to the patient to actually make the payment, the burden of the provider is to remove as many barriers to payment as possible. Billing and collections experience is often a provider’s final touch point with a patient following care, but can be the most impactful in making a lasting impression. One study found that patients who have negative billing experiences are five times more likely to share negative reviews to others.

Presentation of payment within a high-end consumer goods environment is done face to face. The salesperson presents themselves from around the counter extending a pre-negotiated price and requesting payment. The good is inspected and delivered onsite and payment terms are held by the retailer by email address or credit card.

That’s not a realistic delivery model for healthcare, but something can be learned from it. In fact, most patients don’t understand their medical bills and a single care event can result in the patient receiving multiple medical bills from various care providers. Bills may have their own unique format and payment options with no billing standardization.

The lack of face to face contact with care providers in the presentation of payment further disconnects the patient with the impact of non-payment. Each entity they came in contact with can be a major obstacle in successful account resolution.

Several companies are looking to move the patient payment process closer to the retail experience by offering user-friendly, online payment automation for patients that consolidates multiple invoices and payment channels onto a single platform. Further, connecting patients to the financial responsibility they have to community health increases the services providers can offer. Patients who must search or call through the billing department to get an updated balance are much less likely to pay than a patient with ready access to all invoice transactions from a provider. When patients understand what they are paying for, debt recovery increases.

A Case Statistic

An Atlanta physician group discovered an increasing number of bills were going unpaid because patients either felt they were too complicated to understand or the practice lacked flexible payment options. They implemented a Patientco platform that offered patients and staff quick and easy access to bills, as well as a variety of payment methods (POS, online financial portal, phone payment, and mail-in) and an internal ability to customize its billing process. This change resulted in a total patient revenue increase of 32% within 3 years.3


The reality is that every part of the patient payment process has room for improvement. Low hanging fruit include offering a variety of easy and convenient options to pay – whether by cash, check, payment plan, or debit card, either in the office, online, over the phone or by mail – and consideration of the ways that the patient experiences each portion of the delivery model.

Link to whitepaper


[1]  “The Patient (Financial) Experience: How consumerism is reshaping healthcare”, White paper, PATIENTCO, downloadable at https://www.patientco.com/resources/

[2] Beck, Melinda. “Here’s a Way to Cut Your Health-Care Bill: Pay Cash.” Wall Street Journal 16 Feb. 2016: R6

[3] Customer Satisfaction and Self-Pay: The Hidden Opportunity. April 2011. Presentation transcript. Waltham, MA: Connance, Inc.

[4] Blitch, “The Case for a Patient-Centric Revenue Cycle”, MiraMed, 13 July, 2015. Available online at https://www.miramedgs.com/insights/32-focus/past-issues/summer-2015/317-the-case-for-a-patient-centric-revenue-cycle