Healthcare Providers Target $250 billion Point-Of-Sale Business

The healthcare industry has found it imperative that it shift to an electronic payment system as it becomes common to require some co-payment from patients at the time of service, according to speakers at the recent Healthcare Financial Management Association conference in San Diego.

These payments, called out-of-pocket health expenditures by the industry, totaled $250 billion in 2005, up 150 percent from $100 billion in 1997, according to Centers for Medicare and Medicaid Services, Office of the Actuary, a division of the Health and Human Services Department. And most of the payments were in amounts less than $20, leading to stacks of checks and cash sitting in doctor’s offices. These transactions were typically manually reported with hand-written receipts passed back to the patient/payer.

The process is time-consuming and error prone leading to lost deposits and consumer complaints.

Executives at one healthcare system that worked to address this problem five years ago explained to conference attendees its approach.

The University of Pittsburgh Medical Center set out in 2002 to maximize its healthcare payments at the point-of-sale (POS) through a comprehensive, unified system, according to the seminar by Karen O’Malley, systems coordinator, and Linda Zang, assistant treasurer. UPMC needed to be able to handle a variety of payments from both patients and non-patients, collect payments from within its system and post patient payments within 24 hours.

It was no small task. The UPMC is an integrated healthcare delivery system in Western Pennsylvania that manages 12 hospitals, 40 rehabilitation centers, two insurance companies and more than 2,300 physicians.

Compounding the problem five years ago was the lack of effective software suites for healthcare POS collections. Healthcare consumers seek multiple products and services and have multiple insurance coverage programs. That means a variety of payments for the same service.

On the plus side was the fact that retailers have worked for years to develop POS systems that cover huge numbers of products for sale at multiple prices, use that information to generate inventory management, store all that in a database, and provide proof of payment to consumers, and build a paper trail.

“Healthcare thinks of itself as a unique industry, but in terms of consumer payments it’s not so different from the retail industry, “said O’Malley. The UPMC decided to think in terms of WWWD, or What Would Wal-Mart Do?

The UPMC applying some of these retail-oriented ideas to developing its POS collection system called U-Pay and launched it in August 2003 with 600 staff accepting payments at about 200 worksites. Its goal was to increase POS collections by $15 million that first year. The system proved successful and grew quickly to today where U-pay is installed at 500 workstations and used by 1,400 staff. Total collections processed through U-pay have grown from roughly $60 million in fiscal 2004 to a projected $140 million in fiscal 2007.