A PYMNTS Intelligence Report, “Pains and Gains: Conquering Healthcare’s Payment Woes,” in collaboration with American Express, highlights critical inefficiencies in healthcare payments and reveals how digital transformation could provide much-needed relief.

Payment Crisis in Healthcare

Inefficient payment systems threaten the financial health of healthcare organizations. More than half of payment leaders are concerned about delays in processing payments and claims, which they see as significant operational risks.

While 80% believe streamlining these processes is crucial, only 53% have adequately automated their workflows, indicating a reliance on manual methods that result in costly errors and lost revenue. Consider 84% of organizations report financial losses due to outdated accounts receivable processes, and 85% recognize the urgent need to improve payment experiences, emphasizing the demand for a comprehensive overhaul.

A dependency on traditional paper statements escalates collection delays. Nearly 70% of providers still use paper for patient communications, while 50% cite that as a primary concern in managing revenue cycles. This antiquated practice not only hampers timely collections, but also prevents healthcare providers from tapping into the efficiency gains offered by digital payment solutions.

Harnessing Digital Solutions

As healthcare begins to recognize the potential of digital payment solutions, innovative companies are stepping in to fill the gaps. For instance, Weave recently introduced payment installment plans that allow healthcare businesses to automate recurring payments, enhancing both patient convenience and administrative efficiency. These types of solutions can alleviate some of the $760 billion to $935 billion wasted annually due to payment inefficiencies.

Partnerships are also emerging to leverage technology for improved financial operations. Companies like Waystar and Meditech are using artificial intelligence (AI) to streamline billing processes and reduce operational costs. By automating payment workflows and enhancing claims accuracy, they aim to create a leaner healthcare ecosystem.

Planet DDS further illustrates this trend with Cloud 9 Pay, which simplifies payment processing in specialized healthcare settings through features like contactless payments and compliance automation.

Navigating Obstacles

Despite the advantages of digital payments, barriers to adoption persist. Cybersecurity risks present a formidable challenge, as the report found 78% of healthcare organizations experienced at least one cybersecurity incident in the past year, impacting care delivery for more than 60% of respondents. These threats underscore the necessity for robust security measures as the sector transitions to digital systems.

Additionally, patient acceptance remains a hurdle. About 26% of healthcare professionals report that patient resistance is a key obstacle to implementing digital payment solutions. Educating patients about these technologies is crucial to alleviate their concerns, particularly among older demographics who may feel intimidated by modern payment methods.

The healthcare industry faces significant challenges that require a multifaceted approach to payment modernization. Key strategies include democratizing access to digital payment resources through education, enhancing patient communication with integrated platforms, and adopting AI-driven billing models for precise cost estimates. Additionally, a comprehensive digital health wallet could streamline transactions while ensuring robust cybersecurity.

To navigate these complexities and reap the rewards of modernization, the sector must embrace digital transformation, which promises to enhance efficiency, improve patient experiences, and secure financial stability.

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Unlike traditional watches, the Wave uses algorithms to create sensations of warmth or coolness, helping to relieve hot flashes, improve sleep and manage stress. By targeting the wrist, the device counterbalances discomfort in other parts of the body.

Embr Labs’ wearable thermal technology provides thermal haptic experiences (heating and cooling) at the touch of a button and is helping tens of thousands of people live better lives through personal temperature control.

The technology has won several awards, including an honorable mention in Time Magazine’s Best Inventions, the National Sleep Foundation’s SleepTech Awards, and the AARP Innovator in Aging Award.

This month, Embr Labs was selected as a quarterfinalist for the 2024 Digital Health Hub Foundation: Digital Health Awards in the Best in Class — Women’s Health category for its commitment to enhancing the lives of women experiencing menopause through innovative temperature therapy. The recognition underscores the company’s impact on women’s health and its dedication to improving healthcare delivery through digital advancements.

Of more than 1,500 submissions, 16 quarterfinalists per category were selected. Finalists will be announced Sept. 22, and the winners will be revealed at the HLTH event on Oct. 21.

In an interview with PYMNTS, Shames said the recognition “highlights the real impact Embr Labs is making in our customers’ lives. Our mission is to enhance wellbeing through the power of temperature, and this award underscores the progress we’re making toward that goal.”

Shames described the Embr Wave as an “intelligent wristband that delivers warming and cooling sensations to help regulate how people feel. Many of our customers use its cooling feature to manage hot flashes, and the technology has been clinically validated for this. Additionally, Embr Wave aids in sleep and stress management, addressing three of the most common challenges women face during menopause. We’re proud of the positive feedback from customers who have experienced its benefits firsthand.”

Embr Labs developed a predictive capability for menopausal hot flashes, Shames noted, adding: “This breakthrough allows future versions of the Embr Wave to initiate cooling before a woman realizes she is having a hot flash. We are creating a world where women never have to worry about hot flashes again.”

Shames said the company’s focus has always been on delivering tangible value to its customers and solving their thermal discomforts.

“What has evolved is how we engage with customers along their journey,” he explained. “This year, for example, we introduced the Embrship subscription, which provides access to the Embr Wave for just $20 a month and includes benefits like a lifetime warranty and a new device every two years.”

Embr Labs aims to be a strong advocate for women’s health issues, particularly menopause, an area that has been historically underfunded and underserved, and by 2025, there will be 1.1 billion women experiencing menopause, Shames noted.

“We believe that by addressing these gaps, we contribute to a more equitable healthcare landscape,” he said. “Embr Labs combines clinically validated, patented technology with a customer-first approach. Many companies with strong technology struggle to reach customers, while others that have traction lack validation. We stand out by bridging this gap. This award reinforces our credibility and will help us continue building trust with customers and partners. Our challenge and opportunity lie in scaling Embr Wave to reach as many of those women — and the broader population benefiting from the product — as possible.”

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A PYMNTS Intelligence report, “Pains and Gains: Conquering Healthcare’s Payment Woes,” done in conjunction with American Express, reveals how the industry must confront these inefficiencies and integrate digital solutions into its payment processes.

The Financial Toll of Outdated Payment Systems

Healthcare’s payment system inefficiencies are a concern, imposing a considerable burden on organizations. More than half of healthcare payment leaders see delays in payment and claims processing as a severe threat to operational success. Despite this recognition, only 53% of organizations have successfully automated their payment workflows. This discrepancy highlights a troubling reliance on outdated, manual processes, which continue to plague the industry.

According to the report, inefficiencies in accounts receivable (AR) processes are particularly damaging. Consider 84% of healthcare organizations report financial losses due to cumbersome AR procedures. These inefficiencies are exacerbated by the heavy dependence on paper-based communication, with nearly 70% of providers still using paper statements for patient payments. This reliance on outdated methods not only hinders timely collections but also represents a missed opportunity for leveraging the benefits of digital payments. The result is a financial drain that underscores the urgent need for modernization in healthcare payment systems.

Digital Innovations Easing Payment Challenges

Despite these challenges, digital payment solutions are emerging as a beacon of hope. Companies like Weave are leading the charge with innovative payment platforms designed to enhance patient convenience and operational efficiency. Weave’s recent introduction of payment installment plans allows healthcare businesses to manage recurring payments effortlessly, improving cash flow management and patient satisfaction. By automating payments through saved card information, Weave’s platform reduces administrative overhead and simplifies the payment process.

Additionally, artificial intelligence (AI) is being harnessed to address financial waste in healthcare. A collaboration between Waystar and Meditech aims to reduce the estimated $760 billion-$935 billion lost annually due to payment inefficiencies. Their AI-driven solutions focus on automating workflows and improving billing accuracy, which are critical for lowering operational costs and optimizing financial performance in healthcare.

Similarly, Planet DDS is demonstrating how specialized healthcare settings can benefit from digital payments with its Cloud 9 Pay solution. This platform facilitates tap-to-pay and contactless transactions while ensuring compliance with payment card industry standards. By integrating such solutions, specialized practices can streamline operations and enhance the patient experience, showcasing the potential of digital payments to transform even niche areas of healthcare.

Challenges to Widespread Digital Payment Adoption

Despite the promising advancements, the path to widespread digital payment adoption in healthcare is fraught with challenges. Cybersecurity remains a significant concern, with 78% of healthcare professionals reporting at least one cybersecurity incident in the past year. The impact of these incidents on care delivery is substantial, underscoring the need for robust security measures to protect both patient data and payment systems.

Patient resistance is a significant obstacle to the adoption of digital payments in healthcare, with 26% of professionals identifying it as a major barrier. To facilitate a smoother transition, it is essential for digital payment solutions to meet patient expectations and build trust. As the industry grapples with outdated payment systems, the shift to digital offers a chance to address inefficiencies and enhance both financial and operational outcomes.

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Starting this month, patients can submit a virtual clinical interview for common, lower-risk conditions — such as allergies, urinary tract infections and respiratory illnesses — and usually receive a diagnosis and treatment plan within an hour.

Patients can initiate the process through myCigna.com, completing a virtual interview in eight to 10 minutes. Once reviewed by a doctor, patients receive a summary via text or email, and any necessary prescriptions are sent to their preferred pharmacy.

Healthcare Accessibility

In an interview with PYMNTS, Shannon Olson, VP of U.S. Employer Strategy and Core Solutions for Cigna Healthcare, talked about the company’s new E-Treatment service.

“E-Treatment gives customers another way to quickly access quality care without the need to talk ‘live’ with a doctor,” Olson said. “Customers simply provide information about their medical history and current condition through a dynamic online questionnaire in the MDLIVE patient portal. The treating doctor will review the information submitted and quickly deliver a diagnosis and treatment plan, including sending any necessary prescriptions to the customer’s pharmacy of choice. Customers will be notified through email or text when their visit summary is ready.”

Traditional telemedicine, Olson noted, engages a synchronous model where a doctor and patient talk live either by phone or video.

“For those who don’t have time to step away for a phone or video call or may prefer an asynchronous experience — maybe from nerves, trouble hearing or a loud household — E-Treatment is available for the same quality urgent care services,” she said.

Cigna is committed to expanding access to affordable and convenient care for its customers, Olson said, noting that MDLIVE has become popular since the COVID-19 pandemic.

“We continually look for new options to be added to our portfolio to improve the health and vitality of our customers,” she said.” E-Treatment was a great next step in continuing this delivery.”

Cigna’s customers recognize the convenience of accessing care from their smartphones or computers whenever they need it without having to spend time in traffic or sitting in a doctor’s waiting room, Olson said.

“Cigna Healthcare has significantly expanded access to covered virtual care services for millions of customers enrolled in [fully insured] employer-sponsored plans,” she added, noting these plans include no co-pays with MDLIVE primary care providers, chronic condition management and integrated referrals to follow-up care with specialists..

Olson said E-Treatment is powered by MDLive’s Bright.md technology, which provides clinical questionnaires to support diagnosing and treating conditions.

“These comprehensive questionnaires are evidence-based and dynamically changing — allowing for a thorough, personalized experience for each patient,” Olson said. “The questionnaire has been vetted and contributed to by clinical leadership or large, leading health system partners across the U.S. All care decisions are made by board-certified doctors.”

Growing Acceptance of Telehealth Services

What has the feedback been?

“Internal data show that 99% of patients are happy with their E-Treatment experience,” Olson said, noting many of them are first-time participants. “In fact, 34% of E-Treatment customers were using virtual care for the first time. E-Treatment is able to be started on a customer’s own schedule so they can initiate care when it is convenient for them. It is also available in Spanish (in addition to phone/video visits), where the questionnaire and after-visit summary are prepared in Spanish.”

The PYMNTS “ConnectedEconomy Monthly Report” for April 2023 noted patient participation in telehealth since January 2022 ranged from 30% to 40%, not far below the roughly 50% figure for monthly in-person visits.

In an interview with PYMNTS last year after GNC embraced virtual health, Allison Bentley, senior director of strategic programs at GNC Health, discussed the rationale.

“After years of research, it was clear how necessary supplemental virtual healthcare is for many consumers,” Bentley said. “We know the U.S. healthcare system can be difficult to navigate, especially when dealing with high reliance on private insurance, and the need to see different specialists, who have more and more limited appointment availability, which makes the process even more complex. We took that into account and wanted to address it by offering an accessible and affordable solution for consumers across the nation.”

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With this software, users can customize their hearing experience directly from an iOS device, fine-tuning settings like volume and tone to match their needs. This approval builds on the FDA’s 2022 initiative to simplify access to hearing aids, eliminating the need for prescriptions.

According to a Thursday (Sept. 12) release, the HAF was tested with 118 participants and demonstrated performance on par with professionally fitted devices. In an interview with PYMNTS, an FDA spokesperson talked about the motivation behind authorizing the HAF software for AirPods Pro.

Improving Access

“The FDA authorized the Hearing Aid Feature as the sponsor demonstrated the device met the applicable criteria to market this product to consumers,” the spokesperson said. “The FDA believes this technology will further advance the availability, accessibility and acceptability of hearing support for adults with perceived mild to moderate hearing loss.”

The spokesperson noted that the HAF was evaluated in a clinical study of participants at multiple U.S. sites.

“The results demonstrated that subjects who used the HAF self-fitting strategy achieved similar perceived benefit as subjects who received professional fitting of the same device,” the spokesperson said. “Results also showed comparable performance for tests measuring levels of amplification in the ear canal, as well as a measure of speech understanding in noise. No adverse events related to the device were observed in this study.”

According to the spokesperson, “this over-the-counter hearing aid software is available on a widely used consumer audio product, thus expanding the potential reach of hearing support for adults with perceived mild to moderate hearing loss.”  

The FDA has addressed the limitations of OTC hearing aids:

“If you are 18 years of age or older and believe you have perceived mild to moderate hearing loss, you can buy an OTC hearing aid in a store or online without seeing an ear-nose-throat (ENT) doctor, or a licensed hearing health care professional (audiologist). … If you, or a friend, or family member suspect that you have a more severe or profound hearing loss, you should consult with a licensed hearing health care professional, as OTC hearing aids may not provide adequate benefit for more severe hearing losses. This is because OTC hearing aids are limited in their maximum output and may not be adequate to treat more severe hearing losses.”

No Doctor Required

According to the spokesperson, the HAF uses a self-fitting strategy and users can adjust it to meet their hearing needs without the assistance of a hearing professional.

“The HAF is set up using an iOS device (e.g., iPhone, iPad), and the user’s hearing levels are accessed from the iOS HealthKit to customize the HAF,” the spokesperson said. “Users can refine the volume, tone and balance settings after setting up the HAF.”

According to the release, more than 30 million American adults report some degree of hearing loss and “using hearing aids has been linked to reductions in the frequency or severity of cognitive decline, depression, and other health problems in older adults.”

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Fragmentation and opacity play a large part in that imperfection. The traditional healthcare journey can often be complex, with multiple touchpoints from primary care to specialists and pharmacies, and that’s before even touching on longstanding billing pain points.

“The basic information of ‘what to do next’ if you are seeking care and looking for guidance is hard to come by,” James Allen, vice president, U.S. Channel Management and Partnerships, Primary Care at Pfizer, told PYMNTS’ Karen Webster.

And while the COVID-19 pandemic drastically altered the global healthcare landscape, particularly around the ways in which care organizations connect with patients, there still exists a giant opportunity to streamline, digitize and ultimately democratize how patients seek and process healthcare information.

One of the most notable shifts during the pandemic was the decline in trust in healthcare institutions, particularly after the federal government withdrew from its role as a universal actor. This contributed to widespread confusion about vaccines, treatments and preventative measures, which has persisted even after the worst of the crisis passed.

“We learned by being a major actor during COVID that there’s a receptivity from many consumers around not managing the healthcare journey, but playing a role in helping them toward the path to better care,” Allen explained.

He added that the launch last month (Aug. 27) of PfizerForAll, a direct-to-consumer healthcare platform, is the company’s response to the challenges faced during the pandemic and an attempt to simplify access to healthcare information and services.

Driving Patient Empowerment Through Technology

Nearly two in every three Americans (65%) say coordinating and managing healthcare is overwhelming and time-consuming, Pfizer said in a news release, citing a poll by the American Academy of Physician Associates. And according to the same poll, 73% of them feel the healthcare system is not meeting their needs. Direct-to-consumer (DTC) healthcare models are designed to make healthcare more accessible, affordable and convenient by reducing barriers to access, empowering patients and simplifying the healthcare journey.

The DTC healthcare model can also play a critical role in addressing the growing doctor shortage in the U.S. — one projected to reach a deficit of 86,000 physicians by 2036 — by leveraging technology, improving efficiency and reducing the strain on the traditional healthcare system. As the U.S. faces a shortage of primary care physicians and specialists — driven by factors like an aging population, physician burnout and insufficient medical training programs — democratizing access to healthcare via innovative digital channels is becoming more pressing.

Allen noted that Pfizer’s efforts during the pandemic earned the company significant consumer trust, and this trust became the cornerstone of Pfizer’s strategic pivot to direct-to-consumer healthcare.

“We’ve recognized the responsibility that comes with this trust. It’s not just about COVID — it’s about other therapeutic areas where patients are looking for reliable guidance,” he said. “Each patient wants to retain the right to choose their care path. We provide options, whether that’s telehealth, seeing a doctor in person, or getting enough information to return to their regular provider.”

PfizerForAll’s key focus is on providing patients with optionality, or multiple paths to care, by giving patients to access healthcare information, the ability to connect with healthcare providers, as well as enabling them to manage treatments more easily.

While it’s only been a few weeks since the launch, as data comes in, Pfizer expects to make adjustments to the platform, learning more about patient needs and how best to serve them. “We don’t yet know what all the feedback will look like, but we’re open to learning from it and evolving the platform accordingly,” said Allen. “We’re watching engagement closely — how patients interact with the site, where they continue their journey, and what needs they express that we aren’t meeting yet.”

But data from third-party sources indicates the platform will have a warm welcome. An Experian Health survey in late 2023 found that 56% of individuals receiving treatment want more digital options, and an academic survey in August found that respondents who use virtual care did so for greater convenience (39% of respondents), shorter wait times (30%) and the ability to see a specific provider (17%).

The Future of Direct-to-Consumer Healthcare

Telehealth has become an increasingly important part of healthcare delivery, particularly in areas where access to specialists is limited. Allen described how telehealth fits into Pfizer’s strategy, particularly for conditions like migraines where specialist appointments can take months to secure.

“Telehealth is a fantastic asset, especially for helping to educate the patient about what to do next. It can act as early triage and appropriately route them into the right setting of care,” he said. This is crucial for patients dealing with chronic conditions that require ongoing management, where immediate care can make a significant difference.

While PfizerForAll provides virtual care options, Allen stressed that it’s not intended to replace traditional healthcare, but rather to supplement it. “We want to help people access routine primary care services where it suits them, while also encouraging them to maintain strong relationships with general practitioners.”

One of Pfizer’s primary goals with PfizerForAll is to help reduce healthcare costs, both for patients and the healthcare system.

“Many of the interactions we’re supporting are relatively low-cost and can be lower-cost for the patient. For example, vaccinations remain free for most patients with insurance or government coverage,” Allen explained.

An essential — yet challenging — element of PfizerForAll is the participation of healthcare providers. However, these providers are not employed by Pfizer, as Allen noted. Instead, Pfizer partners with external entities to manage the recruitment and operation of healthcare professionals who participate in the platform.

“The broader question is, how do you incentivize practitioners to practice virtual care?” Allen asked rhetorically. He noted that many healthcare professionals in the U.S. are increasingly interested in the flexibility that comes with virtual care, offering them a way to balance their in-person and virtual workloads. In many cases, patients can receive care through telehealth consultations rather than waiting for in-person visits, which can be both time-consuming and expensive.

“A lot of what we need to do is to reduce the complexity, to increase the information available, and help share that there is a path forward that patients can take that can be positive and that can have a dramatic effect on their wellbeing,” Allen said.

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Health Bill Assist lets payers support plan members with out-of-network health bills at no cost to members, according to a Monday (Sept. 9) press release.

“Out-of-network billing is not only confusing and frustrating for members, but the process of handling out-of-network claims, member appeals and provider negotiations adds [a] significant administrative burden to health plans,” Zelis President of Price Optimization Jay Deady said in the release. “We are proud to provide a level of support not readily available in the market today, helping health plans explain and mitigate these costs effectively.”

Health Bill Assist is designed to improve plan members’ healthcare financial literacy, spot and resolve billing discrepancies, and use Zelis’ team of expert negotiators to settle bills with providers when appropriate, per the release.

A Zelis study showed that many consumers face challenges in paying for healthcare, and those who struggle to pay medical bills often face repeated instances of financial strain, according to the release.

Similarly, the PYMNTS Intelligence report “The Digital Platform Promise: How Patients Want to Streamline Healthcare Payments” found that 21% of consumers encountered at least some trouble when paying for their healthcare. The study also revealed that 16% said insurance covered less than anticipated.

Some demographics may be particularly vulnerable if the range of payment options, including cards and payment plans, is narrowed down. According to PYMNTS Intelligence’s 2024 Women’s Wellness Index, nearly a quarter of women who struggle to pay monthly expenses said medical bills are a primary reason for distress.

“That’s why collaboration is critical,” the release said. “In addition to enhancing the overall value and support provided to members, it leads to a better understanding of financial outcomes and a stronger member experience.”

In other healthcare payments news, Banyan President Alpesh Chokshi told PYMNTS this week about a new collaboration between loyalty program Bilt Rewards and Walgreens — underpinned by Banyan’s platform and receipt-level data.

The partnership can help eliminate the friction and waste surrounding flexible spending accounts (FSAs) and healthcare savings accounts (HSAs).

“Consumers get greater convenience and savings on the healthcare-related items they need; Bilt and payment cards gain increased spend engagement; and Walgreens boosts its sales and customer experience,” the report said.

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That’s the amount of money that disappears from flexible spending accounts (FSAs) every year as the “use it or lose it” feature of FSAs kicks in.

There’s a rush as patients figure out what’s eligible, and it’s a conundrum that individuals and households face when deciding how to allocate their pre-tax dollars to pay for their own and their dependents’ healthcare expenses. They’ve funded the accounts, and the hard part is spending that money the right way.

The confusion is compounded at the register, where patients must be careful to put their healthcare spending into buckets — using their FSA accounts for some items, and their credit and debit cards for others. The paperwork is onerous, and juggling receipts can be daunting.

Banyan President Alpesh Chokshi noted to Karen Webster in an interview that a new collaboration between loyalty program Bilt Rewards and Walgreens — underpinned by Banyan’s platform and receipt-level data — can help eliminate the friction and waste surrounding FSAs and healthcare savings accounts (HSAs).

The positive ripple effects are considerable. Consumers get greater convenience and savings on the healthcare-related items they need; Bilt and payment cards gain increased spend engagement; and Walgreens boosts its sales and customer experience.

Easier Savings, More Rewards, Better Wellness

To cut down on the confusion and frictions of juggling separate FSA and HSA cards and credit cards, as well as submitting receipts, Bilt expanded its loyalty rewards program via a collaboration with Walgreens to maximize wellness benefits.

Through this joint retail and financial service effort, powered by the Banyan platform, Bilt members have exclusive access to Automatic Healthcare Savings, a seamless way to apply FSA and HSA benefits when shopping at Walgreens using any card linked to their Bilt account.

In terms of the mechanics, Bilt members shop at Walgreens for everyday items using any card linked to their Bilt account, earning Bilt Points on their spend. Within 72 hours, Bilt notifies the member of any eligible FSA or HSA items, and they can choose to apply their FSA or HSA funds to those items in the Neighborhood > Pharmacy tab of their Bilt account. Bilt then credits the original payment method and charges the FSA or HSA card for the eligible amount.

It’s an automated way to access healthcare spending account funds, Chokshi said. It uses the capabilities of item-level identification and rewarding. The partnership also offers rewards for prescriptions, which in turn makes cards stickier and top-of-the-wallet for many users.

Chokshi said consumers coming into Walgreens as Bilt Rewards members get automatically rewarded on every purchase, including double points on Walgreens branded products.

The platform model gives Walgreens, and by extension other merchants and issuers, the “degrees of freedom” they need to monetize their various commerce experiences and higher-margin products, Chokshi said. That’s important given the fact that, as Chokshi said, “the rewards game is tapped out” with interchange largely given back to consumers in the form of rewards. So, merchants must find new ways to create value, monetize their data with consumers’ permission and offer item-level rewards.

Brands that want access to consumers will pay a premium to expose those individuals to a coupon or experience that uses item-level transaction details to personalize those offerings. We’re not far away from a world where, for example, manufacturers of a particular brand of toothpaste can offer “double” rewards to Walgreens’ customers automatically, he said.

“You’re tapping into another pool of funds as opposed to a [merchant’s] marketing fund or credit card reward loyalty fund — and for the manufacturer, that’s a trackable and easy way to see the ROI versus a broad-based rewards program,” Chokshi said.

The fact that the Walgreens and Bilt healthcare spending collaboration has gone live using the Banyan platform, Chokshi said, “will open up more opportunities” for item-level data-powered use cases.

Banyan, he said, is looking toward a launch with a major co-brand partner in the next year that can offer more tailored rewards for different types of spending. The Walgreens and Bilt model can be applied in other controlled spending areas such as the Supplemental Nutrition Assistance Program (SNAP), Electronic Benefits Transfer (EBT) and Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

“It’s exciting to be eliminating the frictions [in healthcare spending],” said Chokshi, adding: “This is putting money back in people’s pockets that they might have lost otherwise.”

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The merger is designed to employ artificial intelligence (AI) to help improve payments from health plans to providers, Bloomberg reported Thursday (Sept. 5).

According to the report, the deal will bring together three companies from New Mountain’s portfolio: The Rawlings Group, Apixio’s payment-integrity business, and a newly acquired firm called Varis. The combined group is valued at more than $3 billion, sources familiar with the matter told Bloomberg.

The report noted that the healthcare sector is riddled with payment errors, with around $100 billion in improper payments in government health programs just last year. That’s brought about the rise of payment integrity firms aiming to reduce insurers’ mistaken outlays.

In the case of New Mountain, the companies hope to combine AI and other digital tools with large health-care data sets to bring more efficiency to the payment system, Matt Holt, the firm’s president of private equity, told Bloomberg.

“The overarching trend is absolutely toward the reduction of administrative cost,” he said.

Research by PYMNTS Intelligence has shown that payment and claims inefficiencies are a drain on healthcare resources, with 84% of organizations saying they’ve suffered financial losses from cumbersome accounts receivable processes. 

“Not surprisingly, 85% acknowledge the crucial need to revamp their payment experiences to curb the time and drain on resources required by current systems,” PYMNTS wrote earlier this year. “With the overwhelming majority identifying the issue as mission critical, these inefficiencies call for urgent intervention.”

More recently, PYMNTS examined the ripple effects of late payments permeating the health sector in the report “Critical Care: Healing Healthcare With Real-Time Payments,” done in collaboration with The Clearing House.

According to the report, late payments are a considerable issue, with a quarter of payments to small healthcare providers arriving past due. 

“This delay jeopardizes their ability to meet payroll, pay vendors and maintain smooth operations,” PYMNTS wrote. “For many providers, the strain of managing late payments translates into increased pressure on accounts receivable teams and the need for meticulous cash flow management.”

The problem was exacerbated by the recent surge of late payments faced by hospitals and health systems across the country. In the first quarter of this year, a rise in late payments led to revenue shortfalls of as much as 18%. This situation was aggravated by a cyberattack on Change Healthcare, a major payment processor, which exacerbated financial strains for healthcare providers.

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A PYMNTS Intelligence report, “Critical Care: Healing Healthcare With Real-Time Payments,” in collaboration with The Clearing House, examines the advent of real-time payments that offers a way to streamline financial transactions and enhance overall industry performance.

Delayed Payments Disrupt Healthcare

The ripple effects of late payments permeate the healthcare industry. Providers frequently grapple with delayed payments, which disrupt cash flow and create significant operational challenges.

According to the report, late payments are a considerable problem, with 25% of payments to small healthcare providers arriving past due. This delay jeopardizes their ability to meet payroll, pay vendors and maintain smooth operations. For many providers, the strain of managing late payments translates into increased pressure on accounts receivable teams and the need for meticulous cash flow management.

The problem is magnified by the recent spate of late payments faced by hospitals and health systems across the U.S. In the first quarter of 2024, a surge in late payments resulted in revenue shortfalls of up to 18%. This situation was worsened by a cyberattack on Change Healthcare, a major payment processor, which disrupted payment processing and exacerbated financial strains for healthcare providers. Such incidents underscore the critical need for more efficient payment solutions.

Real-Time Payments Heal Healthcare

Real-time payments offer a potential remedy to the challenges posed by delayed payments. By facilitating instantaneous transactions, real-time payment systems can enhance cash flow and improve financial management for healthcare providers.

PYMNTS data reveals that 61% of small to mid-sized healthcare providers who use real-time payments cite speed as a primary benefit, with many also noting improvements in cash flow management and accuracy.

Eighty-three percent of small healthcare businesses used real-time payment options last year, and 81% of those reported high satisfaction with these systems. This positive feedback underscores the potential benefits of real-time payments in bolstering operational efficiency and financial stability.

As more healthcare providers adopt real-time payments, they are experiencing enhanced cash flow and reduced administrative burdens, allowing them to focus more on patient care rather than financial transactions.

Barriers to Real-Time Healthcare Payments

Despite the evident advantages, the transition to real-time payments is not without challenges. Many healthcare providers continue to rely on legacy payment systems due to concerns about fraud and the slow adoption of new payment methods by customers. PYMNTS reports that 17% of small healthcare providers do not use real-time payment systems, primarily due to fears of increased fraud risks, with 31% of these providers citing fraud as a major concern.

Other barriers include limited consumer adoption, with 26% of providers who did not receive real-time payments citing this as a key issue. Additionally, some providers are deterred by perceived costs and the complexity of integrating new payment systems into existing infrastructures. Oracle Health’s challenges in modernizing its recently acquired Cerner payment systems illustrate the broader difficulties faced by the industry in updating financial technology.

The rising demand for faster payment options highlights a shift toward greater efficiency and convenience in healthcare. Patients now expect the same ease in financial transactions as they experience in other digital interactions.

To meet growing patient expectations, healthcare providers are adopting real-time payments, boosting cash flow and financial stability. This approach improves patient satisfaction, encourages repeat visits, and reduces administrative burdens and unpaid bills.

Challenges, however, such as system integration, data security and patient adoption persist. Digital payment platforms and automated systems can help overcome these obstacles, enhancing both financial management and patient care.

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