Electronic Payments Grow Slowly in Healthcare

Healthcare providers are slowly but surely moving towards electronic payment systems as Americans assume greater payment responsibility for their medical care, according to results from a recent survey by Celent, LLC.

The trend represents a lucrative growth opportunity for cash management service providers looking to help the industry manage its revenue cycles, according to Celent, a provider of research and consulting services on the application of information technology to financial institutions.

In its recent report “Healthcare Providers’ Payment Practices and Expectations: A Survey,” Celent found that healthcare providers are in the mid-stage of converting to electronic revenue cycle management systems. However, respondents are optimistic about the move away from paper-based payments.

The following are some key changes respondents expect to occur within a couple of years:

• Payers’ use of checks will drop from 54 percent to 40 percent of total payments within two years.

• Direct payments from patients will rise from 16 percent to 21 percent.

• Credit card and debit care payments are expected to double from 3 percent of the total in 2007 to 6 percent in 2009.

• Providers will invest in systems that allow them to receive a greater number of electronic payments for direct posting to their patient management systems.

• Although providers are not undertaking major projects, they are incrementally electronifying their transaction handling process.

Based on survey findings and interviews, Celent said it expects growth in healthcare-related electronic data interchange (EDI), extended lockbox use and remote

deposit services to be strong. Celent warned, however, that growth in these areas will come only if healthcare providers realize compelling value in using electronic systems.

The online survey of healthcare providers focused on hospitals and was conducted in the spring of 2007. Four thousand online surveys were sent to financial executives at healthcare providers. Researchers received 220 qualified responses from hospitals with revenues ranging from $50 million to $999 million.