Fintech Solutions and Open Banking Transforming the US Healthcare Payments System
TL/DR –
The healthcare industry is struggling with rising costs, complex billing systems, and the burden of administrative work, with healthcare administration accounting for about one-third of costs. Financial technology (fintech) and open banking can provide solutions by streamlining healthcare payments and creating a simplified environment for sharing data. Transforming the system to digital records and invoicing could create a $2.9 trillion opportunity in commercial payments for fintech and financial institutions, and significantly improve the patient financial ecosystem, billing effectiveness, and user experience.
Soaring Healthcare Costs and Fintech Solutions
As US healthcare spending escalates to $4.8 trillion, approximately $14,423 per person, the need for fiscal reform becomes crucial. Administratively cumbersome processes account for about one-third of the industry’s costs.
Siloed Healthcare System and Fintech’s Role
US healthcare payment system resembles a disorganized grocery store, as described by Harvard economics professor David Cutler. This lack of uniformity necessitates hiring specialists for administrative tasks, leading to physician burnout. However, fintech and open banking can address these problems and improve the patient experience.
Addressing Healthcare Payment Problems Digitally
With approximately half of US health consumers receiving paper bills and 79% preferring a unified digital platform, the demand for electronic patient payment methods is climbing. Medical practitioners acknowledge that digital platforms can reduce cost burdens and enhance revenue visibility.
Technological Improvements in Healthcare Practice
Healthcare management improvements can include digital health technology, price transparency, and consolidated billing, according to a recent article in the Journal of Patient Experience. These changes can make accounting easier, leading to cost management for both patients and healthcare organizations.
Fintech and Open Banking for Modern Healthcare Payments
Future healthcare may leverage fintech and open banking to streamline processes and reduce pain points. Digital payments can shorten revenue cycles and automate processes, benefiting patients and providers.
Interoperability and Faster Revenue Cycles
Open banking can improve customer experiences by allowing data sharing between banks and service providers. It can streamline healthcare payments and assure patients of privacy and proper data handling, thanks to strict data privacy laws like HIPAA in the US.
Fintech Solutions for Global Digital Services
International patients can benefit from various payment options and the ability to navigate foreign languages and regulations. By modernizing healthcare payments, doctors can focus more on patient care, and medical organizations can improve healthcare access.
Fintech Platforms for Direct Payments
Direct payments via fintech platforms can reduce uncertainty over settlement times and amounts, particularly with international patients. Digital financial services are crucial for healthcare access, especially in countries with high out-of-pocket costs and inadequate healthcare coverage.
Cloud-Native Healthcare Ecosystems
Potential solutions might lie in cloud-native ecosystems. As cloud-native ecosystems grow, they drive change for payments, particularly real-time payments with ISO 20022 standardization.
B2B Opportunities in Healthcare Payments
Fintech also offers great B2B opportunities in healthcare payments. Most of these transactions are still conducted using paper checks. Electronic payments can reduce costs to just $4 per transaction, creating a potential $2.9 trillion opportunity in commercial payments for fintechs and financial institutions.
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