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Based on National Health Expenditure (NHE) data, patients will pay nearly $600 billion out of pocket for healthcare in 2024. We estimate that families and individuals pay another $150 billion each year directly to payers for non-group health insurance premiums. Every one of these dollars moves through some type of payment modality. In addition there is more than $3 trillion of healthcare payments moving between payers (including the government), provider organizations and other healthcare entities. Healthcare payments is so large that it has finally become too big to ignore for multi-vertical players including banks, payment processors, and card networks. Mastercard, for example, is now offering its HealthLock product to all U.S. cardholders.​

Epic is the dominant health IT platform in health systems, hospitals and increasingly, many large independent medical groups. So far, Epic has limited its involvement in payments to creating the MyChart portal for patients, which includes bill payment. Epic itself does not offer a payment solution or financing options. This has created opportunity for payment gateways such as JP Morgan’s InstaMed and Sphere’s TrustCommerce, which sit behind MyChart and process patient payments. Third-party patient portal solutions such as Flywire and Cedar have had challenges penetrating the health system market as Epic has improved the MyChart user experience. We expect Epic’s dominance to limit growth prospects for point solutions in the large provider market going forward.

The B-B side of healthcare has largely made the shift to electronic remittance. Payers utilize EFT and other non-paper methods of reimbursing providers. There are small pockets remaining (typically small dollar or small volume of transactions) that involve checks, but the vast majority of this money moves electronically. For consumers, most payments have moved off check as well. There is a difference across age cohorts - in 2020, 11% of 55+ year old consumers paid out of pocket healthcare expenses with checks, while only 4% of 18-54 year olds used checks. Digital wallets are preferred by younger consumers. Opportunities remain to remove paper from healthcare payments, particularly in B-B-C disbursements for provider refunds, MLR rebates and HSA reimbursements.

While AI is likely to have more immediate impact on the clinical side of healthcare, it will drive meaningful improvement on the financial side as well. Payment-related changes are likely to appear more slowly, but will include enhanced claims processing, better fraud applications, reduced admin cost, improved compliance/ security, and more personalized patient experiences.

Younger consumers tell us - and demonstrate through their actions - that they want tender choices, and they show a strong preference for debit, digital wallet, ACH/ EFT, and other cash-based options. They are also more interested in financing healthcare, with 85% of 18-34 year olds interested in using patient financing options/ payment plans (compared to 36% of the 55+ age group). 69% of 18-34 year olds tell us they have already financed care (compared to 18% of consumers age 55+).

While still early, it is clear that employers are looking for ways to supplement the traditional health benefits they have provided to their workers (e.g., medical/ dental insurance, FSAs, HSAs), especially for the nearly 54% of employees selecting a High Deductible Health Plan (HDHP). Employers are tapping solutions from companies such as Paytient and MedZERO to help their workers manage large, often unexpected medical bills. These may utilize the tax advantages of funding an HSA.