Digitization of Healthcare Payments: A Bold New Future

The old way of paying for healthcare is broken. It's slow, it's inefficient, and it's a waste of time and money.

But it wasn't always this way.

In ancient times, healthcare was paid for with coins or barter. By the mid-century, doctor’s visits were paid in cash or by check. But as healthcare became more complex, so did the payment process.

Patients started seeing multiple providers, insurance companies became involved, and each had their own system. Medical bills were often sent in the mail, and it could take weeks or even months for payments to be processed. All of that made it difficult to keep track of what was owed, which often led to errors and other inefficiencies.

As healthcare became more complex, so did the payment process. This made it more difficult to track payments and ensure that everyone was getting paid what they were owed.

In the 1970s, electronic funds transfer (EFT) was introduced as a way to streamline payments. EFT allowed payments to be made electronically, which was faster and more efficient than cash or checks. But, EFT was not widely adopted by healthcare providers or patients. It was still a new technology, and many people weren’t comfortable using it.

The New Millennium

In the 2000s, the rise of the internet and mobile devices led to a new wave of innovation in healthcare payments. Digital payment platforms made it easier for patients to pay their bills online or through a mobile app. They also offered a number of benefits for payees, such as improved efficiency and accuracy.

The digitization of healthcare payments is a rapidly evolving field. But why did change take so long?

One reason is that the healthcare industry is highly fragmented. Thousands of healthcare providers and payers, each with their own systems and procedures, makes it difficult to create a single, unified digital payment system.

Another is that healthcare data is highly sensitive, so it’s crucial to ensure that digital payments are secure. The healthcare sector is often targeted for ransomware attacks, among other breaches, which average $10.1 million per incident, according to IBM’s recent “2022 Cost of a Data Breach Report.”

Finally, there is a lack of incentive for providers and patients to adopt digital payment methods. Many providers are still using outdated billing systems, and some patients are reluctant to provide their financial information online.

Pandemic Pandemonium

The response to the Covid-19 pandemic brought a slew of innovations, from a reliance on telehealth visits to the use of contactless payment options to pay for even in-person medical visits.

Years before the healthcare crisis, the younger generation was driving the move to digital tools to pay medical bills. According to the U.S. Census, Millennials and Gen Z outnumber the Baby Boomer and older generations. These “digital natives” are seeking medical care – and a digital-first, on-demand experience. They’re more likely to want to pay with a digital wallet rather than a credit or debit card, for instance.

Now, after the pandemic, inflation and the affordability of healthcare are the two top concerns for those surveyed, according to the Pew Research Center. High deductible plans have been a popular approach for taming the family monthly budget. Though any patient who is living paycheck-to-paycheck may be hard pressed to pay out-of-pocket for medical care until they meet that deductible.

Future of Healthcare Payments

As new technologies emerge, we can expect to see even more benefits within the healthcare environment. For example, blockchain technology could be used to create a more secure and transparent payment system.

The future of healthcare payments is bright. As digital payment methods become standard, we can expect to see a more efficient, accurate, and secure system for everyone.