Healthcare Providers' Payment Practices and Expectations: A Survey

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25 October 2007


San Francisco, CA, USA October 25, 2007

Healthcare Providers' Payment Practices and Expectations:A Survey

Financial institutions serving healthcare providers should experience a growing demand for cash management services that electronify providers' revenue cycle management process, according to the results of a recent Celent survey.

Healthcare providers, due to their unique needs and pain points, are a lucrative growth area for cash management service providers. In a new report, , Celent analyzes the results of a survey used to generate the Metavante Payment Progress Index - Healthcare Edition. Celent's findings include:

  • Respondents are optimistic regarding the shift away from paper-based payments toward electronic payment types. They expect payers' use of checks to drop from 54% to 40% of total payments within two years.
  • Coincident with the rise in consumer-directed healthcare initiatives, providers anticipate the proportion of payments from patients to rise from 16% to 21%.
  • Providers have moved faster toward EDI for claims than for remittances, with 96% able to send an electronic claim, whether directly or through a third party, compared to 76% able to receive an e-remittance for direct posting to their patient management system.
  • Providers are planning to invest in systems that will allow them to receive a greater number of electronic remittance advices (ERAs) for direct posting to their patient management systems. Already a majority of respondents (76%) state that they are able to receive ERAs, a figure that is expected to rise to 93% by 2009. Although a large proportion of providers claim the ability to receive ERAs, 69% of these providers are also receiving these same remittance transactions in paper form, which leads to the conclusion that they are still distributing paper remittances for, at minimum, to manually manage exceptions processing or, at maximum, to manually post payments.
  • ERAs generated the greatest improvements in transaction processing, with 46% respondents giving them a "high degree of improvement" grade. Lockbox came in second, earning a "high" from 35% of respondents.

"Although providers are not undertaking major projects, they are incrementally electronifying their transaction handling processes, generating numerous opportunities for financial institutions to expand their cash management services. Based on survey findings and interviews, we expect growth in healthcare-related EDI, extended lockbox, and remote deposit capture services to be relatively strong compared to other verticals. Growth, however, will only come with a compelling value proposition and cost/benefit equation. Providers' moderate satisfaction levels with the status quo suggest that there is inertia," comments Alenka Grealish, author of the report and Managing Director of Celent's Banking Group.

This 22-page report contains 15 figures and 3 tables.

A table of contents is available online.

Members of Celent's Healthcare Banking research service can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.