Photo from Unsplash
The Consumer Price Index rose by 8.5% year-over-year in July 2022, compared to a rise of just 2.8% in the Health Care Price Index. 2.8% might not seem alarming, but it’s important to consider that rates set by Medicare and insurers, which are a key driver of healthcare costs, are agreed to months in advance. This could delay the full effects of inflation on the healthcare industry. Healthcare providers must be proactive to the economic unpredictability of inflation by reducing operating costs.
The Rate of Inflation Has Never Been Higher
The Bureau of Labor Statistics reports that the inflation rate is the highest it’s been in 40 years, as shown in the chart below. The increase in inflation has been driven by supply chain issues, production costs, surging demand costs in the wake of the COVID-19 pandemic, as well as geopolitical issues. Economists predict that a decline in inflation could begin to occur gradually by mid-2023, which could bring about a rebound in the economy. However, history has proved that inflation can precede a recession.
The Impact of Inflation on Providers
The reality is that providers’ bottom line will be affected, causing fees for services to rise. As providers, it will become necessary to demand higher reimbursement rates that payers will ultimately pass along to consumers in the form of higher costs. Higher medical care costs significantly impact patients and drives their decisions on obtaining medical care. As providers move to a value-based care model, one of the ways they can reduce operating expenses is to move to a paperless billing and payment platform.
3 Areas to Reduce the Printing and Mailing Expenses of Patient Statement Services
Healthcare providers process and send out thousands of billing statements each year. The cost can be astronomical when you consider the current state of inflation and the economy. With the costs of consumer goods skyrocketing, so are the combined costs for medical patient billing.
- Postage – Over the years, the cost of postage has increased significantly. Remember when a postage stamp was 20 cents? In fact, just a few weeks ago, the cost of a US postage stamp increased by 2 cents from .58 to .60 cents. While most providers bypass postage stamps by using metered mail, they won’t be able to bypass the increase. The metered mail rate increased by 4 cents from .53 to .57 cents. That might not seem like a lot, but when you send out hundreds of billing statements, it adds up quickly.
- Paper – For providers who haven’t yet digitized their offices, it’s time to heed the saying “save a tree.” We are in the midst of a paper shortage, and it’s not expected to get better. Prices for pulp, the raw material of paper and corrugated boxes, have shot up 30 to 40 percent since last summer, says Nicholas Meade, senior economist for the pricing and purchasing service at IHS Markit.The rise in costs can be attributed to the increasing cost of transportation, paper mills in North America being shuttered or reducing production, and new environmental regulations in China (the world leader in paper production). Oddly enough, even though demand has declined with the digitization of business, it’s estimated that we now use twice as much copy and printer paper as we did in 1985!
Healthcare providers that haven’t gone paperless send out mountains of paper each year. For example, if you use a carton of paper (10 reams = 5,000 pages) and add in the cost of the toner cartridge, it will cost you about $125 annually. Say your office uses 10,000 pieces of paper a day x 260 business days; that’s 2,600,000 pieces of paper. (520 reams. 52 cartons). That adds up to $6,500 a year! That’s not even including the cost of paper envelopes!When you consider inflation, the rising costs of postage and paper products, along with the labor shortage, not going paperless with your medical payment systems will cost you increasingly more each year.
- Labor – It’s extremely costly to automate the whole paper billing process. Healthcare providers are struggling with administrative staff shortages, which has caused an increase in the use of staffing firms (which can also be costly). This, along with the increased cost of living and the demand for higher wages, is driving up labor costs. And if you aren’t in the position to work with a staffing agency, those missing admin staff aren’t able to fill the gaps in their office staff. Lack of staff means there is no one to reconcile, print, stuff envelopes, and apply postage for patient billing.
A Paperless Solution for Providers
Investing in an electronic medical billing and invoice system will significantly reduce costs for providers. Going paperless isn’t just about reducing costs; it’s also about the shift to a patient-centric, value-based care model. E-Invoicing streamlines invoice management eliminates errors, and reduces the costs of manual processes of medical patient billing. It also offers the opportunity for patients to pay invoices online with customizable payment tools. E-invoicing also provides seamless reconciliation and posting of payments back to patients’ accounts, increasing patient engagement, and satisfaction.
Learn more about our provider e-invoicing offerings to reduce inefficiencies and costs by clicking the button below. Or reach out to our sales team for a demo.