This is the first in a three-part series of posts discussing the patient experience trends for 2023. Today’s post will discuss the market forces that brought healthcare to the precarious position it is in today, and how consumer power is primed to reshape the industry.

In 1980, only about 5% of health system revenue came from the patient, and 95% came from third-party payers, insurers and other payers who insulated the healthcare revenue stream. This allowed healthcare providers to operate without having to think too much about the patient experience and how patients are engaging throughout their care experience, especially from a financial perspective. But today, about a third of all healthcare revenue is coming from the patient. (1)

One of the primary mechanisms of why it’s happening now is because of the pressures of economic inflation over the years. The graph below shows the inflation for several markets from 2000 to 2021.

As we can see, the cost of Health Services has continued to skyrocket to more than 200% inflationary growth, and has grown to be the most expensive category across the US economic landscape. (2)

For those looking to blame hospitals or health insurers for the current state of the cost of healthcare, there really isn’t a single bad actor driving up this inflation (although some stakeholders may bear more responsibility for this than others). 

There are many, many drivers behind these cost increases. Ultimately, what it means is that there are rising costs for the patients, who are stuck between hospitals and insurers negotiating between who will pay for what and how much. And the patients don’t get a seat at that table.

Hospitals are left to collect the patient responsibility portion of the bill, and they are unfortunately often left out to dry. Since 2000, hospitals have lost $620 billion in unpaid patient debt. (3)  While that can make it sound like people just need to pay their medical bills, today 100 million (almost one out of three) Americans have medical debt, with 12 million of them having more than $10,000 in medical debt. (4) 

That is a heavy burden, and it can be incredibly challenging to try and figure out how to pay for it all. Many individuals just choose not to. As a result, hospital accounts receivable numbers continues to climb and climb. And as a consequence of these ever-growing ARs, approximately 1 in 5 rural hospitals in the US are in danger of closing, while urban hospitals are also struggling. So much so, that it is no longer unusual to read about a hospital bankruptcy in the news. (3)

As an industry, we are struggling to find a solution to this problem. One important lever to moving this mountain is focusing on improving the patient financial experience. Traditionally, patient engagement was primarily done through an EMR or third party patient portal that served as the primary mechanism for patients to digitally engage with their healthcare providers. 

But when we look at usability of those systems, only about 15 percent of patient populations access those portals. And of that 15 percent, only 13 percent came back a second time.(5)  Clearly, not much patient engagement was occurring. These patient portals and EMRs were not meeting patient needs or expectations. When we talked to patients about why they aren’t using it and four key frustrations became apparent: (6)

  • It takes too much time and effort to try and set up
  • It’s cumbersome and not easy to find or access that information
  • Once they do get into it they can’t understand how to use it, because it’s often all using medical terminology and lingo and is laid out in ways that make sense for a clinician but not necessarily for a patient end user.
  • If patients do find the information they’re looking for, it often doesn’t match the invoices coming through the mail. 

One of the primary drivers of these issues is the fundamental divide between paper and digital processes. While much of the documentation and billing functions are now digital, many of the supporting business processes are still manual and paper-based. While many platforms and companies are trying to tackle this, they tend to focus on single pain points or processes. This has created siloed processes and fragmented experiences.

Next week’s post will dive deeper into that transition to digital patient experiences and what we can learn from other industries that have gone through similar disruption already.

  1. McKinsey
  2. Chart of BLS data from the American Enterprise Institute
  3. American Hospital Association
  4. Kaiser Family Foundation
  5. US Government Accountability Office
  6. US Office of the National Coordinator for Health Information

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