In the bid to transform the most paper-laden of verticals, to render an opaque system transparent, 2021 is already shaping up to be a banner year in healthcare.
To that end, UnitedHealth’s Optum announced a deal to buy Change Healthcare for $13 billion – a cash consideration of $7.8 billion, with the remainder in debt – in a deal that seeks to modernize and streamline providers’ revenue management activities, and with it, payments.
As reported by PYMNTS earlier in the week, after being bought by UnitedHealth, Change Healthcare will join with OptumInsight to “more effectively connect and simplify core clinical, administrative and payment processes — resulting in better health outcomes and experiences for everyone, at [a] lower cost.”
The deal is expected to close in the second half of the year. But beyond the timing of the deal and the milestones along the way, such as shareholder and regulatory approval, it’s worth delving into what Optum (and, by extension, Change Healthcare) get from the acquisition.
In the release announcing the deal filed with the Securities and Exchange Commission (SEC) on Wednesday (Jan. 6), the companies stated that “Change Healthcare’s payment capacities combined with Optum’s highly automated payment network will simplify financial interactions among care providers, payers and consumers, and accelerate the movement to a more modern, real-time and transparent payment system.” The companies also made note that physicians will be paid more quickly, and consumers will get the “same simplicity” managing healthcare transactions that are seen in other financial activities.
Transparency in the System
That seems to be a nod toward the consumerization of payments – a goal that stretches across any number of businesses. And in details from Change’s own site, there’s some discussion on just how unpredictable healthcare costs can be (especially for the patients), where 61 percent of those surveyed stated that paying for healthcare seems more complex than grappling with mortgage payments. Among Change’s offerings are solutions that help calculate what a patient’s financial responsibility will be for visits or procedures.
And in getting a sense of the scope of the friction points in payments within the healthcare space, Scott LoPresti, chief operating officer of Rectangle Health, told PYMNTS in an interview that billing and transactions are ripe for tech-underpinned modernization.
“A product of the healthcare industry is that billing is still very much a paper process,” he said. “Multiple bills are typically sent after a service, and unfortunately, those bills tend to get ignored. That’s why revenue collection as a whole tends to lag.”
Late last year, PYMNTS wrote that “the pandemic, with its public health fears, has trained a spotlight on the labyrinth of the healthcare industry — specifically, billing, the mess of codes and charges and paper statements that puzzle patients and have providers chasing cash flow.” Roughly $375 billion annually is solely the responsibility of patients to pay.
And in an interview with Karen Webster, Florian Otto, CEO of Cedar, an online patient engagement and billing platform, said that only 40 percent of every dollar is collected by healthcare providers. Indeed, allowing patients to resolve their bills can boost provider collections by at least 30 percent, he told Webster.
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