Stabilizing the Cost of Electronic Payments

According to a recent survey by the 2018 Advisory Boards, 62 percent of health system CEOs are preparing their enterprises for more sustainable cost controls, and that includes turning an eye toward their payment processor. But what does it actually take to stabilize the cost of electronic payments?

Electronic payments in healthcare are especially complex. Those involved are looking for better ways to understand what they are paying and why they are paying for it. They want a more cost-effective way to integrate and process payments through their billing systems.

There are two scenarios that I see come up often regarding pricing.

  1. The Pricing Mirage – With over 500 pricing points for credit card acceptance and statements the size of short novels, fees can easily be hidden and slipped into a healthcare provider’s processing statement. These fractional fees matter as they can drive up cost significantly.
  2. Beating Up the Little Guy – Community hospitals seem to be getting hit the hardest when it comes to fees. The worst I’ve seen was a community hospital that was paying over six percent to accept credit cards. It was outrageous. And although that may be the extreme, it’s not uncommon to see a net effective rate in the four percent or more range.

The unfortunate common factor in both of these scenarios is that they occur when there is no active service from the merchant service provider. Any time a provider offers zero service, the result will be overpayment. Payment processors need to be more proactive.

What is Proactive Service?

To make a comparison, when a health care provider notices a potential problem or health risk, they have a conversation with the patient. They are being proactive in heading off future issues. Ultimately, this arms the patient with valuable knowledge and they can make an informed decision to correct the problem.

Problem is, most merchant service programs don’t work the same way. A proactive partner should be working to ensure the program stays on the right track. To lay it out in detail, the following are standards of proactive service.

  • Transaction Monitoring – Monitoring transactions is a key way to ensure the lowest cost possible is being paid to the card brands. This also means watching for changes in the business including new staff members, software updates and aging technology, all of which can impact the fees from card brands.
  • Annual Validation – The payment service provider should conduct an annual validation of what the healthcare system is paying, who they are paying it to, and what they are getting for the cost. All of this is critical. It’s not enough to have a simple conversation. Data needs to be reviewed and discussed along with everything else.
    Security Changes – In the past, the PCI Counsel would update the PCI-DSS standards every two years. Today, changes are made at a much more frequent rate, sometimes as much as once a month. Keeping on top of these security changes can help the healthcare facility stay on top of its costs.

It might be best to say that proactive service goes hand-in-hand with transparency. Healthcare providers deserve better service from their electronic payment processors, and they are starting to demand it. If you have questions about how your agreement with your current payment processor is being honored, feel free to contact us. We’d be happy to discuss.

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