The term mental accounting, coined by Richard Thaler, winner of the 2017 Nobel Prize in Economics, refers to the tendency of consumers to keep their money in a series of “mental accounts” rather than just one large pool. Possible Source of Misconception: Mental Accounting Moreover, both Gen Xers and millennials are fully comfortable with this payment model, and it’s important to keep in mind that these are the individuals who increasingly will make medical and financial decisions for their aging baby boomer parents. And for the provider, this approach works to reduce patient and provider bad debt by not allowing expenses to build up over time. For patients, keeping payment information on file for per-visit charges is comparatively less of a commitment than signing up for a recurring subscription service, because the healthcare payments are intermittent and therefore easier to track. d The subscription goods and services industry is only one example of many where consumers are asked to store their payment information and be charged later.
Clearly, there is an understanding gap between provider assumptions about patient payments and reality.Ĭonsumer expectations about paying for goods and services have changed-and healthcare providers need to undergo a major mindset shift to keep up. The real reluctance toward card-on-file policies and changing payment approaches lies with the providers, not with the patients. Yet only 20 percent of healthcare providers believe the card-on-file approach is among the best ways to reduce the cost of patient collections, despite clear evidence that contradicts this belief: The same survey found that keeping patients’ credit card information on file can reduce collection costs by up to 34 percent.
c This finding suggests less than a quarter of patients would be reluctant to keep a card on file. In fact, 78 percent of patients responding to a recent survey reported that they would be willing to keep a card on file for charges less than $200, making this approach the most preferred patient payment method. Providers, however, have been hesitant to adopt a system in which patients would keep a card on file to take care of their balances. bĮxperts in healthcare payment and collections are urging healthcare providers to start thinking more like retailers to boost patient net collection rates and operating income at a time when high-deductible health plans (HDHPs) have become the norm and patient financial responsibilities have reached record levels. Speaking generally, nearly one-third of Americans store their payment information online. According to a 2017 study, 67 percent of baby boomers, 78 percent of Gen Xers, and 89 percent of millennials make use of service subscriptions, which commonly store payment information online and bill on a recurring basis. The prevalence of subscription services like Netflix, Blue Apron, Birchbox, and others has changed the way many consumers think about payment. Health care is behind the times when it comes to payment collection.
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