A female receptionist assists a female patient at a front desk in a modern doctor’s office.

Streamlining Patient Refunds Can Save Providers Time and Money


Digital payments can help reduce paperwork and reinforce patient loyalty for healthcare providers.

Patient refunds are a common occurrence for healthcare providers, creating a labor-intensive and expensive pain point that doesn’t show signs of going away. Not surprisingly, providers are searching for digital solutions that can streamline payment processing and the refund process.

One reason for the continued influx of healthcare payment refunds is that patients with high-deductible health plans are increasingly required to shoulder more of the responsibility for paying for their treatment while providers often collect payment at the time of service. For a typical ambulatory care center, approximately 20% of revenue now comes directly from patients, up from 5% a decade ago. It also has become increasingly common for many large hospital systems to provide patients with an estimated price and request them to pay before providing certain services, but these estimates don’t always get it right the first time.

Yet many of the current systems for providing refunds to patients are headache-inducing. Paper checks remain the primary method for delivering payments, despite Federal Reserve data showing that check usage in the U.S. has declined over the past decade as consumers increasingly opt for cashless payments. Carrying a higher risk of fraud compared to digital alternatives, checks are not only time-consuming for providers and frustrating for patients, but also costly, with each paper check that is dropped into the mail costing four to eight times a digital transfer.

In addition, the prospect of collecting and storing the necessary payment information to provide digital refunds is equally unpalatable to many healthcare systems. Offering digital payment solutions not only poses storage challenges for providers, but forces them to become a repository for sensitive financial information, including account details such as checking account and routing numbers for each patient. On top of the security risks involved in storing sensitive data, there is the added administrative burden of ensuring patient payment information remains up to date.

"Healthcare providers are in the business to deliver exceptional patient care, not gathering and storing financial information," says Adam Keck, Head of Managed Service Solutions at Fifth Third Bank. "By storing payment credentials, providers are taking on an increased burden and risk that can detract from delivering exceptional patient care."

Escheatment Complexities

With healthcare providers still reliant on manual payments, they are also saddled with the responsibility of handling any unclaimed refunds and escheating funds to the government. This becomes especially complex for providers who operate in multiple states. Legal staff are required to keep track of different regulations between states and ensure that the correct procedures occur within the required time frames, a costly process.

"With paper checks for example, you have to keep track of when they’re issued, conduct additional patient outreach, follow unique state rules, and remit payment back to the state if somebody doesn’t claim it," says Megan McCarthy, Vice President and Senior Treasury Management Product Manager in Healthcare at Fifth Third Bank.

At the same time, providers are facing greater pressure to enhance the payment experience for patients. With studies indicating that patients are increasingly willing to shop around, comparing providers and services until they find a value-focused experience, studies show that the payment experience with a healthcare provider also impacts loyalty. One study estimated that 60% of patients would go so far as switching providers following a substandard payment experience. As a natural extension of that payment process, patients are also evaluating the provider’s refund process. Investing in making the refund process as frictionless as possible can reinforce patient loyalty.

"Providers are being evaluated on all aspects of the patient interaction," says McCarthy. "There’s the care that patients receive, the experience, and the bedside manner, but if the payment experience doesn’t meet expectations, that also impacts the patient’s willingness to use a provider. Just like in the rest of our retail lives, patients expect digital experiences, choice, and flexibility, and that’s just not common in healthcare."

Customer Service and Choice

While providers have previously found it hard to find an efficient enough solution for managing refunds, new financial solutions have emerged that can make the process more seamless.

These newer solutions typically lead with digital-first offerings such as virtual prepaid cards that can easily be used at online merchants like Amazon, while still providing the option of a bank transfer, a paper check, or even a plastic card to cater to individual preferences. "Some people just need that physical option," says McCarthy. "But if you’re digitally savvy, then you have a virtual payment which you can immediately access. We know one size doesn’t fit all, and having options gives patients the choice to interact with the payment in the way that they need."

These new solutions also offer greater convenience by automatically leveraging existing information on file, such as email addresses and phone numbers, to communicate refunds. They also look to ease the pressure on overstretched providers through offering best-in-class customer service to handle all communications surrounding the refund, such as when patients call or email to inquire about the nature of a refund.

For providers who have been struggling to manage the challenges that check issuance brings, there are major advantages to partnering with dedicated experts that are experienced in bringing value beyond just the payment transaction. Fifth Third’s Choice Disbursements for Patient Refunds offering, for example, combines patient digital payments and choices with meaningful relief from administrative burdens such as escheatment, customer service, and the collection and storage of payment instructions.

As providers look to build and maintain patient loyalty, using an external financial resource to manage the refund process can provide a number of advantages, including consistent messaging and branding opportunities, both important marketing tools in the ever-competitive healthcare landscape.

When a patient is making a purchase with a provider-branded prepaid card, the provider’s brand is continually top of mind.

Creating positive feedback between provider and patient through efficiently managed and communicated refunds can also yield secondary benefits such as positive provider reviews and referrals to family members, friends, and neighbors.

Judging by the experience of a number of organizations using digital solutions for refunds, digitalizing the payment experience and giving the patient flexibility creates a better connection between the provider and the patient to help foster patient loyalty.

To learn more about this and other treasury management tools, contact your relationship manager or treasury management officer, or find a banker to learn more.