How the Third Party Payer System Increases the Cost of Healthcare
The American healthcare system offers some unique challenges–both for clinics and for patients. In large part, that’s because the American medical ecosystem operates under the umbrella of a third party payer system.
What is a third party payer system? Well, in practical terms, it means that most patients don’t pay the hospital or clinic directly; they pay their insurance company. And the insurance company then mediates care. In other words, patients are paying a third party (insurance companies) to handle all of the billing and payments for their care.
At least… in theory. Mostly. It gets much more complicated from that point. Patients may only cover a portion of the total cost of their care–but it’s still a significant sum to patients. So even though a third party payer system feels like it might insulate patients from the costs, the opposite is true. In fact, modern patients have become incredibly price conscious.
How to Help Your Practice Succeed
The third party payer system is essential knowledge for your financial and billing departments. But… what does it have to do with your marketing strategy?
Well, the answer is that it’s impossible for most patients to remove the cost of care from their thought process. For example, patients may avoid some procedures if they’re worried about high prices–even if those procedures will have tangible (perhaps even lifesaving) benefits.
This means that in order to help more patients get the care they need, it’s essential to make the payment process as easy and as transparent as possible. There are two significant ways that healthcare providers can help in this regard.
Be Transparent About Pricing
In a third party payer system, healthcare costs for any given procedure can vary from patient to patient. There are two primary reasons for this:
- One patient’s insurance plan may cover more or less of their total cost of care. This will vary from plan to plan.
- Each insurance company will negotiate different rates for services and procedures with each hospital system, clinic, or practice.
The variability of these prices can make it very challenging to communicate costs to patients. But new rules are forcing hospitals to be transparent about treatment prices. Which means that patients have become used to a greater degree of transparency–they’re able to plan and This means that other practices and clinics should follow suit.
That said, patients aren’t necessarily expecting you to tell them the final out of pocket costs for any procedure on your website. Most patients are experienced enough to understand that what they owe will vary from case to case. But using your website to provide patients with a ballpark figure can be very helpful. This can help patients better plan for care costs that they will experience.
And when patients feel prepared to move forward, they’re more likely to contact your office to arrange care.
Help Patients Understand Their Financial Obligations
Making prices transparent on your website is one thing. But not every patient is going to thoroughly research the cost of every procedure. Which means that providing patients with a positive experience requires a few extra steps when it comes to billing.
For example, it can be exceptionally helpful to walk patients through their financial obligations before any major procedure begins. (You won’t necessarily have to do this with blood draws or minor tests. Instead, focus on procedures that are likely to have a substantial out-of-pocket cost associated with it.)
You should be able to show patients how much their insurance is likely to cover and the balance that will be owed afterwards. Be transparent about any uncertainties that may arise during this process (there are always some). Patients know that insurance is fickle, and they’ll understand that you may not be able to give them all the answers right away. (That said, the more answers you can provide, the less likely patients are to become frustrated later.)
The more prepared patients are, the more likely they will be to make care payments on time.
Help Improve Patient Education
The American healthcare system can be wildly complicated–even for people who really know what they’re doing. The third party payer system we use is no small contributor to that complexity. And as a healthcare provider, you should never expect patients to fully understand how this system works.
One of the things your clinic or hospital can do, however, is continue to engage in outreach and education. This can include:
- Displaying payment information (not just prices) on your website. For example, if you accept payment plans, that’s something you can mention.
- Discussing payment information on social media. Clearly, this discussion should remain on general terms–and not touch on what any specific patient owes.
- Creating webinar series to help patients make sense of their financial obligations for treatment.
- Having educational literature ready for patients in waiting rooms and exam rooms, or where appropriate.
The more education patients have, the more likely they are to appreciate a positive patient experience–even if the third party payer system can sometimes get in the way.
Patients Should be Thinking About Their Health–But They Can’t Ignore the Costs
Ideally, patients should make decisions based only on their health. That’s what most providers want, after all! Unfortunately, the reality of today is that patients will never ignore the costs. And when prices for procedures are fuzzy, patients might opt out of treatment or care. However, when patients know what to expect, they can make more informed decisions.
This means that price can–and should–be part of your overall marketing strategy. Now, we’re not suggesting that you treat pricing the same way the local grocery store does (sales and special discounts don’t always translate well to a healthcare setting).
But thinking about how your patients feel about prices–and communicating to them in a way that helps them become more comfortable with associated costs can lead to greater patient trust. And, ultimately, that can lead to more patients walking through your doors.
Blog Revised 09/28/2023