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On-Line Bill Pay Making Its Way To Healthcare

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7 October 2009
During the last couple of months, I've noticed increased interest, queries and activity surrounding on-line bill pay for healthcare payments. Given increased healthcare costs paid by consumers and the fact that we normally receive bills for medical visits after the doctor's appointment (i.e., we don't make full payment at the medical facility), on-line bill pay makes perfect sense -- like "traditional" on-line bill pay, healthcare on-line bill pay can be fast, convenient and less expensive than using stamps & envelopes. The industry seems to be moving in a supportive direction. Many of the HSA custodians with whom I am in regular contact offer on-line bill pay as part of their HSA programs. In fact, in Q2 2009, Canopy Financial reported that on-line bill pay spend ($160) outweighed HSA card spend ($98) among its customers' HSA programs. Earlier this week, Intuit announced its Quicken Health Bill Pay solution this is designed to be patient bank- and health insurance plan-agnostic. I am aware of at least one other solution that is planning to enter the same space. No doubt, healthcare on-line bill pay still has a long way to go:
  • Most patients are probably not aware that this payment option even exists. Also, in the broader, retail banking world, on-line bill pay is only used by 40% - 50% of households, so healthcare version will unlikely ever apply the entire population.
  • There is a trade-off between advanced functionality (e.g., e-bill presentment, auto-posting to healthcare providers' systems) and integration efforts.
  • The healthcare banking industry may lack enthusiasm for ACH-based on-line bill payment, as it cannibalizes card interchange opportunties
  • Healthcare on-line bill payment is discreet from retail banking on-line bill payment -- consumers suffer the inconvenience of needing to visit a minimum of two sites to meet all their bill payment needs
Nonetheless, I expect this form of on-line bill pay to grow, as it will be driven by healthcare providers' increasing needs to improve patient collection processes, shorten receivables and reduce bad debt.

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