Tips For Addressing Patient Payment Challenges

Health systems should explore flexible payment plans and focus on pre-service patient engagement to improve revenue cycles, according to a recent PayZen report.

Patients are being asked to take on greater portions of their medical bills at a time when healthcare costs continue to skyrocket. While these diverging trends could spell trouble for revenue cycle managers, they also shed light on opportunities to enhance pre- and post-service collections, mitigate bad debt, and deliver more positive financial experiences for patients.

That’s the takeaway from a new report from PayZen, based on a survey of 213 revenue cycle leaders conducted in partnership with the HFMA. It complements a 2024 PayZen report on healthcare affordability, which was based on a survey of roughly 1,000 patients who had experienced a hospital visit in the previous two years.

High deductibles health plans create an affordability gap

Patient collections are roughly one-quarter of total patient billings, according to the report. One factor influencing patient debt is the increasing prevalence of high-deductible health plans. Just under one-quarter of working-age adults were considered underinsured in 2024, compared with 16% in 2010.

Deductibles vary significantly from one health plan to the next. While the average deductible for employer-sponsored coverage in 2024 was $1,787, average deductibles for marketplace plans ranged from $1,430 for a gold plan to $7,258 for a bronze plan.

With roughly one-half of Americans living paycheck-to-paycheck, amounts owed by patients with high-deductible health plans is often out of reach.

Strategies to address unpaid balances, bad debt

“Hospitals don’t want to be in the business of lending, yet many are left with little choice,” Tobias Mezger, chief revenue officer at PayZen, said in a statement.

Buy Now, Pay Later (BNPL) financing services offered in retail settings could serve as a model for health systems looking to reverse rising levels of unpaid balances and bad debt, according to PayZen. Roughly 40% of American adults use at least one BNPL service, and the market is expected to exceed $122 billion in 2025.

Most health systems already offer in-house payment plans, but these could benefit by allowing additional flexibility to patients or through partnerships with third-party financing partners.

The average patient can only pay $97 per month for medical expenses, while 21% can only afford up to $15 to $30 per month, according to the report. This means that, for the average patient, a 12-month payment plan would only be affordable for medical bills up to $1,200, and 24-month plans would only be affordable up to amounts of $2,350. These figures are well below the amounts many patients could potentially owe under high-deductible health plans.

Despite this math, 58% of health systems cap payment plans at 24 months and 28% cap payment plans at 12 months. An additional 7% do not offer in-house payment plans at all.

Three-quarters of patients shared that they would be more likely to pay their healthcare bills over extended periods of time, according to PayZen.

Alternatively, improving pre-service collections can have a significant positive impact on financial stability, according to the report. Health systems that require or encourage pre-service payments, or require a payment method on file, have a 20% higher overall collection rate.

During a recent HealthLeaders Revenue Cycle NOW Online Summit event, Shannon Ducat, associate vice president of patient access at ProMedica, said her health system has seen an increase in pre-service collections since implementing new scheduling processes that included the creation of a pre-registration team.