Outdated AR Systems Cause Financial Losses for 84% of Healthcare Providers

A recent PYMNTS Intelligence Report, “Pains and Gains: Conquering Healthcare’s Payment Woes,” in collaboration with American Express, highlights critical inefficiencies in healthcare payment systems and how digital transformation can help mitigate these challenges. 

Payment Issues in Healthcare

Inefficient payment processes are impacting the financial health of healthcare providers, with over half of payment leaders concerned about delays in payments and claims, viewing them as significant operational risks. Although 80% see streamlining these processes as essential, only 53% have automated their workflows adequately, relying instead on manual methods that lead to errors and revenue loss. For example, 84% report financial losses tied to outdated accounts receivable systems, while 85% emphasize the need to improve payment experiences, pointing to a pressing need for comprehensive reform. 

Reliance on traditional paper statements is a significant factor behind collection delays, as nearly 70% of providers still communicate with patients via paper, and 50% consider this a key revenue cycle management issue. This outdated approach limits the potential efficiency gains that digital payment solutions could offer. 

Leveraging Digital Solutions

Healthcare is increasingly recognizing the advantages of digital payment solutions. For instance, Weave recently introduced installment plans that automate recurring payments, improving both patient convenience and administrative efficiency, and helping to address the estimated $760 billion to $935 billion lost each year to payment inefficiencies. 

Collaborations are also driving financial improvement. Companies like Waystar and Meditech use artificial intelligence (AI) to streamline billing and reduce costs by automating payment workflows and improving claims accuracy. Planet DDS’s Cloud 9 Pay adds to this trend by simplifying payment processing in specialized healthcare settings, offering features like contactless payments and compliance automation. 

 Addressing Challenges

Adoption of digital payments is hindered by several barriers. Cybersecurity is a top concern, with 78% of healthcare organizations having faced at least one cybersecurity incident in the past year that affected care delivery for over 60% of respondents. These incidents highlight the need for strong security measures as digital systems gain traction. 

Patient resistance to digital payment solutions also remains an obstacle, with 26% of healthcare professionals citing this as a challenge. Educating patients on these new technologies is critical, particularly for older demographics who may be less comfortable with digital payments. 

A multifaceted strategy is essential to overcome these challenges. Solutions include democratizing access to digital payment tools through education, enhancing patient communication through integrated platforms, and adopting AI-based billing for accurate cost estimates. A digital health wallet could also streamline transactions and provide enhanced cybersecurity. 

The healthcare sector must embrace digital transformation to navigate these complexities and benefit from improved efficiency, better patient experiences, and enhanced financial stability. 

Interest Rates and B2B Payments

Despite recent Federal Reserve rate cuts — a 0.5% reduction in September with additional cuts likely — the era of consistently low rates is likely over, with volatility expected to define interest rates moving forward. 

Adrienne Bloom, managing director and head of Asia Pacific financial institutions corporate banking at Bank of America, spoke at PYMNTS’ *Outlook 2030* event in October, emphasizing the need for CFOs and treasurers to rethink liquidity management and B2B payment strategies. Traditionally cautious, treasurers are now opting for floating interest rates over fixed ones while maintaining extra cash on hand for added liquidity. 

Bloom noted the importance of evaluating liquidity by country and currency, where optimizing interest earnings against payment costs can strengthen cash flow. She highlighted that ideally, treasurers would have zero cash balances with data and accounts fully accessible in one place. Bank of America offers such tools, including CashPro, which can perform cash sweeps by country, currency, and company to centralize balances and reduce fees.   

Automation, enabled by platforms like CashPro, minimizes costs, prevents fraud, and eliminates manual errors. CashPro currently supports over 500,000 individual users and 40,000 companies globally. 

As payments move toward instant processing worldwide, liquidity management becomes critical. Bank of America has collaborated with financial institutions to adjust processes for real-time payment demands. New reconciliation methods track real-time receipts, and intelligent receivables use machine learning to fast-track payments and enhance cash visibility. 

Bloom highlighted the evolving roles of CFOs and treasurers who are now both cash and balance sheet managers. She underscored the broader scope and complexity of their responsibilities in the current financial landscape.