Four rules for choosing a patient/doctor payments system

Cloud solutions for paying patients and doctors are revolutionising the back offices of some practices.

Last week, Tyro, the ASX-listed small business payments innovator, stumped up $22.5 million (or a 12.5-times revenue multiple) for medipass.com.au – a nascent cloud-based payment service backed by NAB Ventures, and an alumnus of the NAB Labs nursery for fintech innovation.

Only the week before, CBA paid even more than that for the whitecoat.com.au platform, part of which has a fully digital payments solution that bypasses the need for a payment device to be paying patients.

Just one of Whitecoat’s major shareholders, NIB Holdings, disclosed a $9 million pre-tax profit on the sale of its holding. And while Whitecoat had an established directories business, the size of the acquisition is notable in that the payments side of its operation had yet to generate any meaningful revenue at all.

That CBA is hitching itself to the Whitecoat wagon suggests that their rollout of digital payments and their healthcare payments device, Albert, is imminent.

Payments in health tech is ramping up fast, in large part as a result of the demand that COVID and telehealth have brought to the system for more seamless patient-based payments integration.

Telehealth in the driver’s seat

From the onset of the COVID-19 pandemic, most primary and referred service providers were limited to Medicare bulk-billing of telehealth services, and this capped the opportunity for payments solutions and their funding of private payments. The bulk-billing limitation changed from 1 October last year, when private and mixed billing practices sought more practical methods of collecting private-patient payments outside of their physical clinics.

Telehealth is a classic paradigm of healthcare innovation proving that healthcare technology adoption will always follow the money. Once the federal government confirms that telehealth is here to stay after COVID, which it seems inevitable it must now, most healthcare practices will start to look seriously at optimising payments through some of the new solutions on offer.

Outside of telehealth, similar online payment options had already begun to emerge for privately funded, online-ordered repeat prescriptions. Other innovations were also coming to market for in-home visits, nursing homes and ward rounds.  

At the same time, we have seen Afterpay and its “buy now pay later” cousins commence their run in healthcare.

Some Workcover schemes are finally moving their claims online, and patient-engagement apps are now offering payments technology via their platforms. Even Medicare Online claiming has moved to a web services (API)-based integration model. All of this is pointing towards meaningful competition to HICAPS – NAB’s industry-dominating solution in Allied Health.

Know the rules in this era of choice

How can healthcare providers navigate this increasing choice of available new tech offerings?

Firstly, it is useful to recognise that this wave of payments innovation is breaking over what has long been a broken financial management architecture in healthcare. On its own, progress in payments can further expose other innovation bottlenecks in the transaction value chain.

Therefore, when evaluating the most appropriate payments solution, it is critical to take a holistic lens to your practice’s revenue management function: What headaches will this solution cause my reception team? My practice manager? My bookkeeper/accountant?

In that light, there are four rules to keep in mind when pursuing successful choices in healthcare payments.

1. Source integration is essential. That is, an integration to the practice management system.

Payments should be as frictionless as possible in the practice workflow, regardless of whether the payment is taken on premise or online.

Invariably, a seamless workflow means integration to the source billing system. Entering amounts in both the practice management system (PMS) and a payments terminal, for example, is an error-prone exercise in wasted admin time: a dinosaur of a process that belongs to a bygone era of fax machines and spreadsheets.

The larger PMS vendors in outpatient healthcare tend to be siloed and commercially rigid in their thinking and, given the limited penetration of cloud-based vendors, payments innovators are often subject to lengthy development and release cycles with these vendors.

So even with the commercial will and the capacity to pay for an integration to these systems, payments providers need the patience and resources to negotiate, design, specify and actually deliver an integration.

Many private payment offerings have failed to follow this golden rule, and will not win in the long run. Simply tapping Stripe onto a patient-facing telehealth app might seem like a neat short cut to a modern payments offering, but it is a nightmare to maintain in the billing system – and even more painful to reconcile with bank statements and accounting ledgers.

If the payment solution does not integrate to your PMS today, you are probably looking at the wrong option.

2. Broad-spectrum claiming solutions will trump the one-trick ponies

In terms of digital payments adoption, the reality is that most practices struggle to manage their Medicare Online claims as well as a simple, integrated merchant terminal solution. Add further complexity to that mix, and the adoption appeal will become challenging.

Even in the most progressive practices, no one will want to juggle a booking app portal, a Stripe portal, Workcover claims portals, Eftpos terminals, HPOS services, Medicare Online services – and then attempt to control the resulting transaction flows at the back end.

If all these digital claiming channels could be handled cleanly in a single offering, practices will achieve the El Dorado of front-end revenue and payments management.

This is the major promise of some of the emerging healthcare payments solutions: to have your Eftpos, credit card, health fund, Medicare, foreign student, workover payments all processed together through the same PMS-integrated platform.

And it’s closer than one might think.

Although you have to be more careful about set-up and integration, solutions that are offering multi-channel payment management that integrates to your PMS are worth thinking about. Those systems that have already cracked a few solutions and integrate are likely in the long run to understand the processes for delivering a practice most or all the payments solutions it needs in one integrated back-end platform. It’s more trouble to think about and look at initially, but the pay-off over time can be huge.

3. The patient experience is critical

This is a long-held adage in payments, regardless of industry.

The trend towards app-based payments is well established, and phone-based PayWave-style taps are giving way to tap-free, card-not-present functionality.

This innovation is already in the market, with both Medicare Easyclaim and health fund payments available from phone-based applications. The patient can literally just walk out the door after their consultation.

High-margin patients are becoming accustomed to phone-based identity and payments solutions. Credit cards and driver’s licences are on your phone, as are your “keys” increasingly. Having to remember your wallet only when you go to the dentist? How long will patients suffer that?

The same technology expectation is coming to your practice.

Make sure you future proof your choice of payment technology by ticking off these basics in a new integrated solution.

4. The payments solution must facilitate simple and reliable bank reconciliation

When claiming and receipting in their billings systems, practices take on a kind of fiduciary responsibility for the cash management of their doctor customers, which are sometimes referred to as “contractor” doctors but increasingly as “tenanted doctors”.

Bank reconciliation is the foundation of financial control of any business, and it is even more important when you are managing other people’s money.

Bank reconciliation is not a novel concept and should be a fundamental value proposition of any payments provider.

However, it a complex development process to get such a system right, so a lot of new entrants to the healthcare payments market are avoiding the functionality as a starting point.

For even the smaller independent practices, bank reconciliation tools have been available for almost a decade thanks to the likes of Xero, MYOB and similar SME accounting systems.

Any new automated payments solution and PMS system must be able to play nicely with these tools.

Surprisingly, it’s not only the new entrants that struggle with good reconciliation functionality.

HICAPS integrates to almost all PMS’s in the Allied Health market, where it will integrate a health fund payment from the HICAPS terminal into the PMS.

In some instances, a health fund may end up settling a lower amount into the provider’s bank account, where a patient claim limit might be reached for a certain health service. Even if the HICAPS terminal is subsequently aware of this short payment, it does not integrate the shortfall back to the PMS. If this happens, a PMS payment report will never match the lower settlement in the practice bank account.

So, if the payments solution does not facilitate functional and reliable reconciliation with the bank, preference others that provide for an effective standard of financial control.

Bringing it all together

Some payments-related start-ups, such as Automed Systems, have understood these rules from the beginning.

Welio is a new telehealth free-to-the-practice start-up that is more considered in this department.

Solutions that simply that plug in a generic payments connection and have little understanding of the back-end administration of a healthcare practice can quickly end up creating more work than less.

To give a similar context at the bigger end of town, let’s return to the recent CBA/Whitecoat and Tyro/Medipass acquisitions referred to earlier, and look at how they are addressing the above tenets of adoption.

Both Whitecoat and Medipass were born in the cloud; they are natively card-not-present, or app-based offerings. Similarly, both are chasing the broad-spectrum claims opportunity, albeit in a slightly different way.

Whitecoat has pioneered new claims functionality with Medicare and sought to leverage its relationships with its former health insurer owners for differentiated claiming solutions. Most importantly, they saw the critical need to be seamless in the practice workflow, and partnered with CBA in 2018 to integrate to all the major PMS platforms. Both CBA and Whitecoat appreciate the value of bank reconciliation and have actively sought industry-leading advice on how to achieve it via single-settlement and reference-based approaches.

Medipass came to market earlier, focusing on integrations to smaller Allied Health PMS’s. Some of these smaller, newer PMS vendors based their internal debtors ledger on the Medipass platform, and even marketed the Medipass integration as point of differentiation in their fight against the incumbent vendors. Medipass was clever to shunt the development risk and commercial cost on to their PMS vendor partners.

Not surprisingly, the “you integrate to me” approach did not work for larger, more commercially minded PMS vendors in the bigger money markets of GPs, specialists and dentists.

Now that Tyro has acquired Medipass, the challenge in bringing the Medipass innovations to these markets will be in how fast they can leverage (both technically and commercially) the widely used Tyro integrations to the major vendors. Will it require a major rewrite of these integrations? Will the vendors demand their pound of flesh?

In the end, providers will be the winners as platform offerings like these grow and mature – and as the wiser of the smaller entrants rise to the top as the adopted winners.  

The more that healthcare providers ask the right questions, the faster the healthcare industry will achieve the right answers.

Marcus Wilson is the founder of Surgical Partners, a payments automation platform that integrates GP and Specialist PMSs to the major cloud-based accounting ledgers and Corporate ERP systems. It provides managers with bank reconciliations, and tenanted doctors with a live,-app-based view of their share of billings.