Healthcare providers often find themselves caught in the paradox of modern medicine: cutting-edge treatments paired with payment systems that seem to have been teleported from the 1980s. Patient refunds, an outwardly simple concept, have become a financial and operational burden for provider organizations. The reliance on outdated processes like issuing paper checks not only drains resources but also frustrates patients who expect the same seamless digital experiences they enjoy in other aspects of their lives.
You’d think the healthcare sector would have noticed the rest of the world has moved on. Retailers are zipping refunds back to customers’ phones in seconds, landlords are accepting rent through Venmo, and your niece is receiving birthday money via Apple Pay. Meanwhile, hospitals and provider organizations are issuing checks like they’re sponsoring a county fair bake-off
The inefficiencies surrounding patient refunds aren’t just a headache – they’re a massive market opportunity. In 2022 alone, U.S. healthcare providers issued an estimated $3.1 billion in patient refunds.
However, issuing patient refunds is far from cheap. Processing a single paper check costs providers between $4 and $6, with some estimates climbing as high as $20 when factoring in administrative labor, postage, and fraud prevention measures. Multiply that amount by thousands of refunds annually, and you’re looking at a significant financial impact. Worse still, these costs are largely fixed – printing checks, mailing them, and managing unclaimed property compliance. Costs don’t scale down even when the refund amount is small.
All of that doesn’t even count the cost of issuing stop-payments and reissuing when patients inevitably toss those envelopes thinking they’re junk mail. Because who wouldn’t want to play “guess what this envelope contains” with their healthcare provider?
In an industry where margins are already stretched due to economic pressures and labor shortages, these inefficiencies are regrettable, if not unsustainable.
Here’s the kicker: patients do not want paper checks. A J.D. Power survey found that 65% of patients prefer electronic payment options over checks, with younger demographics (Millennials and Gen Z) particularly favoring digital wallets like Apple Pay, Google Pay, Venmo, PayPal, and Zelle.
Consumers have come to expect choice, convenience, and speed in financial transactions – basically everything the current healthcare refund process fails to deliver
Thankfully, a few payment tech companies have decided enough is enough. Companies like OnBe, Dash Solutions, Verity Pay others are leading patient refunds out of the Jurassic age. These companies provide digital disbursement platforms that enable providers to give patients modern choices for how they receive their money. No more printing checks, sealing envelopes, or fielding phone calls about uncashed payments.
So why hasn’t every provider switched to digital payments? The usual suspects – privacy concerns, integration challenges, and resistance to change – loom large. But these barriers are rapidly eroding as modern platforms prove they can meet HIPAA standards while offering seamless integration with existing systems. The real hurdle may simply be inertia: after decades of doing things “the old way,” many organizations struggle to envision a better path forward. And let’s face it – healthcare organizations still receive 80-90% of their revenues from payers, and are still adapting to the reality that patients are paying a much bigger slice of their healthcare cost out of their own pocket.
So if you are a provider and still mailing checks in 2025, it might be time for an intervention. Patient expectations have changed. The market has changed. And thankfully, the technology exists to stop treating refunds like some arcane ritual passed down from the billing gods of yesteryear.
If you are part of a healthcare organization and want to upgrade your patient refund process, FinMed Partners will assess your current approach, match your tech stack, workflows, and strategic goals with payment solutions, and support you through implementation. Reach out today to learn more at info@finmedpartners.com.