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Price Transparency Addressing Buy Now, Pay Later Model

We are watching the healthcare industry reinvent itself after being buffeted by a pandemic. In addition to problems of staffing, space, and encouraging preventive habits, paying for care has been exposed as particularly problematic.

Fortunately, as reported on the website, new players are stepping up to address it.

Startup Walnut announced Thursday (May 5) its $110 million Series A led by Gradient Ventures.

 Depiction of the different factors that go into the cost of healthcare.

“Being able to provide a valuable service without acting as an inflationary force on the cost of healthcare is a core part of our offering,” the company said in a statement. “We typically describe this as ‘buy now, pay later’ for healthcare. By enabling patients to pay in monthly installments, we alleviate the financial burden for our patients to help them afford and access the care they need.”

“On the flip side, we help healthcare providers capture more revenue by removing price as a barrier for their patients,” Walnut added in the release. “We also speed up their revenue cycle and increase collection rates, all while increasing patient satisfaction.”

Addressing Medical Debt

The pandemic, among many "dents" it made in society, revealed a spiraling medical debt problem. Few medical practices have prioritized payment options and flexibility, reports.

That’s changing as more lenders offer novel forms of installment agreements that have long been available, but often end in default.

In April, payments platform Alchemy brought things up a notch, introducing a fully automated “care now, pay later” solution specifically to address elective and cosmetic surgeries that have been down precipitously throughout the pandemic.

 Depiction of key points of healthcare generating revenue.

Zeroing in on situations where “financing options are sometimes unavailable due to an illegible patient credit score for lenders or banks,” Alchemy said in a press release that it has designed “a system specifically for these instances."

“Our system has an onboarding application, sophisticated decisioning process that creates risk-based offers, as well as mechanisms to collect payments from patients at the time of the procedure through the end of the payment schedule,” Alchemy said in the release.

No Surprises: Not a Total Solution

PYMNTS research found that one-third of patients forego medical treatments over cost and payment concerns. Regulation like the No Surprises Act is designed to put an end to the "billing shock" many patients experienced, but not the inevitable and unavoidable bill.

According to “The Payment Cure: How Improving Billing Experiences Impacts Patient Loyalty,” a PYMNTS report with research sponsored by CareCredit, 33% of patients “were aware that they needed to see a healthcare professional or receive medical care but did not do so.” The most frequently cited reason for this was that they were unable to pay for their care, with 22% citing cost as their prime concern, and 40% saying cost weighed heavily in the choice.


In an article from STAT -- a publication dedicated to delivering trusted and authoritative journalism about health, medicine, and the life sciences -- author Melissa Prosser, senior director of the Financial Health Network’s health care market, and the former director of research at the National Association of Community Health Centers, discusses how healthcare providers and systems can intervene before patients incur debt:

Medical debt is often the byproduct of opaque health care prices, high out-of-pocket costs, misunderstandings over what insurance will pay, limited provider options or networks, unexpected health care events, and lack of awareness of or eligibility for charity care programs. And while policy solutions are needed to address the “upstream” drivers of medical debt, including rising costs of care, higher health care cost-sharing, and structural factors driving inequities, hospitals and health systems shape patient care experiences that can ultimately lead to medical debt and its devastating impacts.

Price Transparency = Better Informed Decisions

The key to addressing medical debt for the healthcare industry is to prevent it from occurring in the first place. Providers and health systems need to be up-front with costs of medical care and procedures -- something that the No Surprises Act addresses.

However, price transparency requires the healthcare industry to have the necessary data to accurately price medical care and procedures. As noted in a previous article, "$450 billion to $500 billion of healthcare [payments still go] through paper checks" which makes it difficult to assess the full scope of the healthcare payments ecosystem.

This is where AI and machine learning technologies have been especially effective, electronifying paper-based payments to create EDI 835 files -- aka turning them into data files -- to utilize revenue cycle management for pricing transparency. Including this data within pricing models will bring the clarity needed for price transparency.

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