By Ryne Natzke

Medical debt continues to be one of America's most pressing public health crises. With an estimated $220 billion in medical debt affecting approximately one in 12 U.S. adults, the financial burden of healthcare costs has evolved into a significant social determinant of health (SDoH) in its own right.

This financial strain doesn't just impact patients' wallets — it may alter their care decisions and health trajectories. According to recent data, one in four adults say that in the past 12 months they have skipped or postponed getting health care they needed because of the cost. Notably, six in ten uninsured adults (61%) say they went without needed care because of the cost.

As the healthcare landscape evolves with new legislation and payment technologies, providers face both challenges and opportunities to address this critical intersection of financial wellness and health outcomes.

The evolving landscape of medical debt
While the fundamental relationship between medical debt and poor health outcomes hasn't changed dramatically in recent years, the legislative environment certainly has. New laws regarding how medical debt affects credit scores have created an unexpected dilemma for healthcare providers. Insurance companies have structured plans with substantial patient responsibility, but this has inadvertently incentivized some patients to deprioritize these payments since there are fewer consequences for non-payment.

This shift creates a challenging dynamic: providers depend more on patient payments for revenue while simultaneously facing diminished collection leverage. Compounding this challenge, state-specific regulations add another layer of complexity. For example, New York prohibits providers from requiring down payments for certain healthcare procedures and mandates disclosure when credit card payments convert medical debt to credit card debt — effectively waiving protections against credit reporting.

The price transparency imperative
One of the most promising approaches to addressing medical debt involves moving cost conversations earlier in the patient journey. While federal price transparency regulations require hospitals to post prices online, these tools can be complicated and difficult for the average consumer to use to understand what they owe. Even healthcare finance professionals may struggle to determine actual procedure costs using only the mandated price lists without additional tools or assistance. The No Surprises Act, along with a recent executive order issued by the White House in late February, aims to enhance the availability of clear, accurate, and actionable healthcare pricing information to support more informed decision-making.

Healthcare organizations are modernizing and going beyond minimum compliance by implementing technological solutions that deliver personalized cost estimates automatically. These tools can analyze insurance coverage and provide patient-specific price information before appointments, allowing for financial planning and informed decisions.

The most advanced systems now integrate seamlessly with electronic health records (EHR) to offer dynamic, personalized payment plans based on patient financial profiles. These intelligent systems can assess payment capacity and automatically offer appropriate options — showing the full bill to patients with demonstrated ability to pay or proactively suggesting installment plans (such as ten payments of $100) for those who might benefit from extended payment terms.

This approach shifts the financial conversation upstream in the care journey, helping patients avoid unpleasant billing surprises and potentially care-limiting decisions.

AI and advanced analytics: Identifying at-risk patients
Beyond price transparency, healthcare organizations are increasingly deploying artificial intelligence and advanced analytics to identify patients at risk of financial hardship and customize their financial experience accordingly.

While traditional models relied primarily on credit scores, today's predictive algorithms incorporate multiple factors: zip code demographics, age, payment history, existing balances, and more. This comprehensive approach enables more accurate prediction of payment likelihood and helps providers tailor financial assistance programs accordingly.

Advanced predictive analytics can help organizations make more strategic financial decisions. For patients with extremely low likelihood of payment, proactively converting charges to charity care can eliminate unnecessary billing friction while encouraging appropriate future care-seeking behavior. This approach prevents patients from avoiding necessary treatment due to outstanding balances they cannot realistically address.

As healthcare systems grow larger and more complex, AI may be helpful for doing this work at scale. Effective risk stratification allows providers to direct limited financial assistance resources to those most in need while implementing manageable payment plans for others.

Inclusive payment options for diverse patient populations
Traditional payment methods often fail to meet the needs of financially vulnerable populations. An estimated 5.4% of U.S. households (approximately 7.1 million) were "unbanked" in 2019, according to the FDIC, meaning they lacked access to traditional banking services. Forward-thinking providers are addressing payment challenges by implementing alternatives such as PayPal, Venmo, in addition to cash acceptance. By offering these diverse payment channels, healthcare organizations provide viable options for these patients to contribute toward their medical bills rather than facing an all-or-nothing scenario.

Regional differences in banking habits further reinforce the need for payment diversity. One healthcare organization in Hawaii implemented PayPal to address a disproportionately high percentage of their patient population who used it as their primary financial service. For these patients, PayPal functions as their de facto banking system — receiving payments through the platform and using it to handle their own financial obligations.

Policy uncertainty and provider response
The healthcare policy landscape continues to evolve, with state-level regulations introducing complex challenges for multi-state healthcare organizations. From treatment of medical debt in credit reporting to rules about interchange fees on healthcare transactions, navigating these variations requires sophisticated systems and approaches.

This regulatory complexity highlights the importance of providers taking proactive measures to buffer patients from potential negative impacts, especially for those already vulnerable due to social determinants of health.

Steps forward: Practical approaches for healthcare providers
Healthcare organizations seeking to address the financial determinants of health can implement several practical strategies:

1. Deploy automated estimation tools: Implement systems that deliver accurate, personalized cost estimates through patient-preferred channels before appointments.
2. Offer self-service payment planning: Enable patients to enroll in payment plans before receiving care, reducing financial anxiety and improving collection rates.
3. Integrate financial screening with clinical intake: Incorporate financial health assessments into standard SDoH screening protocols to identify at-risk patients early.
4. Expand payment options: Implement diverse payment methods including digital wallets, peer-to-peer payment platforms, and traditional options.
5. Consider financial impact in care planning: When appropriate, discuss cost implications of different treatment options, potentially offering more affordable alternatives when medical necessity permits.

Incremental progress toward financial health
While there's no "magic wand" solution to the medical debt crisis, incremental improvements in financial processes can significantly impact patient financial wellness and, consequently, health outcomes.

Progress in addressing medical debt requires sustained, incremental improvements. Success comes from consistently implementing better processes, leveraging emerging technologies, and making thoughtful adjustments that collectively improve patients' financial experiences over time.

By leveraging technology to create more transparent, personalized, and accessible financial experiences, healthcare providers can help address medical debt as a social determinant of health — improving not just financial outcomes, but clinical ones as well.

About the author: Ryne Natzke is chief revenue officer at TrustCommerce, a Sphere Company.