Two Trends Represent Latest Evidence of Growing Consumerism in Healthcare

By Curtis Bauer, Chief Innovation Officer, Sphere
Twitter: @SphereCommerce

Two consumer financial trends – a growing inclination towards “buy now, pay later” options and a desire by millennials to pay down debt – have combined to highlight the importance of providers’ offering digital patient engagement and payment options that deliver price transparency.

These trends are just the latest example of the growing role of consumerism in healthcare, which has followed other industries such as retail, banking, and groceries that have seen their customers grow more comfortable with online options as patients’ expectations have evolved toward greater convenience and flexibility.

To cater to these latest trends, providers can deliver pre-service cost estimates when patients perform digital check-ins, enabling patients to choose from multiple payment plan options after visits have been completed.

A deeper look at the two trends

After years of being maligned for their spendthrift ways on items like avocado toast and lattes, millennials may have turned over a new leaf during the COVID-19 pandemic, according to a LendingTree report based on an anonymized sample of 340,000 credit reports. The study found that between 2019 and 2021, millennials reduced their average debt by the largest amount of any age group ($9,117), which equated to 12.1% of their overall debt. Study authors attributed much of the drop to stimulus payments, a pause on federal student loan interest, and lockdowns that limited entertainment options.

Contrast that with Baby Boomers, who during the same period grew their debt by the highest average amount ($8,848), increasing their overall debt by 6.7%. Low mortgage rates may have played a role in encouraging Baby Boomers to take on more debt, according to the report.

And, even as many consumers are looking to pay down personal debt, some are willing to take on more via the rising popularity of “buy now, pay later” (BNPL) payments, which have over the last few years “gone from a niche payment method to one of the hottest trends in payments,” according to a report by Global Payments.

Of course, installment payments, such as those offered by furniture stores, have been around for years. More recently, however, installment payments have entered the digital age in the form of BNPL, which enables any retailer to offer installment payments for any product, no matter how small, both online and in-store. Prominent BNPL brands include PayPal Credit, Afterpay, Affirm, and Klarna.

BNPL payments are expected to account for nearly a quarter of all global ecommerce transactions by 2026, up from just 9% in 2021, according to Juniper Research. While BNPL is attractive across all age groups, the option holds particular interest for younger consumers: eMarketer forecasts that 44% of Gen Z and 37% of millennials will make a BNPL payment in 2022, compared to 23% of Gen X and 9.4% of Baby Boomers.

BNPL differs from other payment types in that customers may be presented with the option at different points in the buyer’s journey. For example, the option may be shared at the beginning of the process to deliver transparency to make the customer more comfortable with the purchase, or at checkout to provide flexibility for the customer.

For providers, the downside of BNPL is that, while their practices receive payment immediately, they must then rely on a third-party service to interact with the patient to collect payment, and providers have no control over that patient experience. Further, BNPL services often impose additional fees on practices or patients, especially if a patient is late or misses a payment, and may require custom integration with information systems such as electronic health records and practice management.

What providers can do now

In lieu of BNPL options, providers can offer digital patient engagement and payment options that foster patient loyalty while also enabling providers to control the experience. Here’s where to start:

Online pre-service check-in: Patients can perform online pre-service check-ins to confirm important data, such as demographic information, insurance and benefits coverage, copay, credit card information, and service amount estimate based on visit type. Additionally, providers may give patients the option to check-in at on-site kiosks prior to a visit.

When providers inform patients of likely out-of-pocket costs, they increase the likelihood of prompt collections. By offering a more streamlined, automated process, providers can also boost patient throughput.

Post-visit payment plans: Flexible payment plans help patients manage the often-significant expense and uncertainty of medical bills. Similar to BNPL, payment plans allow the balance due to be broken out into installment payments. By offering patients flexible options for payments, providers can improve collections and reduce the amount of bad debt sent to collection agencies. Unlike BNPL today, payment plan functionality can be available via integration with electronic health records systems, depending on payment technology vendor. This creates a seamless experience, prevents double-posting of charges and improves the patient experience through better price transparency in patient portals.

Whether patients are assuming more debt or paying it down, they want options that give them more choice and flexibility. To keep pace with patient expectations, it is important for providers to monitor consumer payment trends and consider how to adapt their practices accordingly to improve collections along the patient journey.