Down to the wire?

Tatum Anderson explores efforts in the development of secure digital networks to send money between patients and hospitals.

Whether it’s paying a utility bill or buying a pair of jeans or even a rare book from a second-hand bookshop thousands of miles away, buying online is easy.
The pioneers of this e-commerce revolution – companies like eBay, Amazon and PayPal – all have their roots in the US. And around the world, a multitude of payment options such as electronic wallets, payment platforms, credit cards, debit cards, Apple pay and Samsung pay are available to customers.
In fact, 88 per cent of US consumers paid a portion of their household bills, such as cable or utility, through an Internet-enabled device such as a laptop computer or smartphone in 2015, and three quarters of all consumers paid household bills through an online channel, such as a bank bill pay portal, website or mobile app. Just 12 per cent of consumers did not pay any bills online.

Paper’s prevalence
Surprisingly, then, an enormous amount of the US’s hospital business is still done on paper; via paper-based invoices and remarkably, cheques.  
Certainly, the industry is moving towards fully electronic transactions using standards adopted by the Health Insurance Portability and Accountability Act (HIPAA).

An enormous amount of the US’s hospital business is still done on paper; via paper-based invoices and remarkably, cheques

But according to US healthcare market research firm Black Book, 88 per cent of financial administrators in medical establishments expect that healthcare payments will be made on smartphones and mobile devices by 2018. The problem is that only 12 per cent are currently ready for electronic payment methods other than cheques, cash or credit/debit cards.
The situation is even worse when the payments come from abroad. Domestic payments are generally treated differently from those the international patients and systems for receiving payments from abroad, say experts.

Poor reconciliation
David Herrick, who runs the international health business at payment technology firm Flywire, says that international payment systems are often very basic.
He recalls coming across a US healthcare provider – linked to a university – that had one account for all international payments coming in to the entire university. Here, everything from medical payments to undergraduate payments and television rights from Japan was paid. Understandably, it was extremely difficult to reconcile the payments – to determine who had paid for the healthcare and who had not.
For international patients, using alternatives such as non-US cheques and credit cards is often not an option.
In US hospitals, that’s often because the bills are so large. “The consideration is the size of the payment. Medical tourism payments are large and our average invoice amount is US$100,000. This then ties back to the payment options that you make available to the patient,” said Adam Tiberi, vice-president, global head of products at Western Union, which specialises in cross-border money transfers. “The high invoice amounts do not necessarily lend themselves to payment by credit card.”
That’s perhaps unsurprising. International patients visiting top hospitals in the US are usually doing so because they require the best care for acute cases – oncology and transplants. These are self-pay patients with money to spend.

Down to the wire 2

Transfer challenges
Outside of the US, where bills may be smaller, even if credit cards are available, many countries don’t have a culture of using them. And in others, patients may be wary of using them. Thailand’s Bangkok Hospital Pattaya hospital, which attributes 60 per cent of the 1,500 invoices a day to foreign visitors, believes foreigners do get relatively good exchange rates when using credit cards. The problem is they are not very keen on using them much. Certainly, they try not to use their credit cards elsewhere for fear of credit card skimming.
Customers tend to use wire transfer – IBAN for Europe or the Swift code for outside the EU.
Bank wire-to-wire transfer can be expensive and take time. Danny Quaeyhaegens, head of the International Insurance Department at Bangkok Hospital Pattaya says certainly, it’s not always a straightforward process. “If a patient doesn’t note his hospital number or other important details correctly we may have payments in our account which are hard to back-track from whom they came and to pay for what,” he said.
Deductions – through foreign currency exchange and bank fees – also make things more complex. They often result in the amount paid by a foreign tourist being short. It may only be a few THB more or less. “It’s harder to get it back,” he said, and added that refunds are even more complex.
Sometimes, third parties often bundle payment of several invoices together. “In such cases if there isn’t a good sheet explaining for which invoices these are partial/full payments, it’s also impossible to assign the money to the correct invoice,” he said.  

Unsophisticated hospitals
In many countries outside of the US, medical tourism is often carried out in cash, says Josef Woodman, CEO of Patients Beyond Borders, who reveals some hospitals accept patients with briefcases full of cash. “In the past, most out-of-pocket patients literally entered the country with pockets full of cash,” he said. “Important new online payment models now make digital transactions a preferred choice for providers as well as patients.”
Certainly, around the world a proliferation of payment systems has launched, from Alipay, which is China’s equivalent of PayPal, to Brazil’s Boleto e-wallet.
Despite this, some of the largest hospitals in the world, from Thailand to India, will accept cash, wire transfer or credit card only. A few, like Apollo in India, have introduced an international hospital online payment portal.

International patients visiting top hospitals in the US are usually doing so because they require the best care for acute cases – oncology and transplants. These are self-pay patients with money to spend

Even if they are set up to accept payments digitally from abroad, hospitals aren’t necessarily as sophisticated in sorting those payments out as one might assume.
Woodman believes there are now companies starting to deal with the problem of cross-border payments to hospitals. Flywire and Western Union are two that act as a kind of payment collection and delivery service for medical tourists. Flywire works for a number of US hospitals such as Mass General in Boston.
“Receiving money from all around the world is not an easy thing. Reconciliation is hard because you are getting [paymets] in from all over the world and often whether they are from credit cards, wire transfers or e-wallet, they come in different forms and then require back-office to go through and identify those payments,” said Flywire’s Herrick. “As a receiver, you really have very little control over how you are getting them, when they are getting them. It’s not a well organised solution from that perspective.”

The low-down on reconciliation systems
So, broadly speaking, reconciliation systems work something like this: a hospital invoices the patient, (typically in advance of them receiving treatment and is a pre-payment for the procedure). The invoice directs the patient to a portal (often co-branded and hosted on behalf of the hospital and in the language) and presents payment options to the patient. The patient receives a quote in their local currency and is presented with respective payment options for the country they are paying from. They select the appropriate option and process their payment. If they want to pay by credit card, or by PayPal or any of the e-wallet applications that is possible.
The companies receive the payment on behalf of the hospital, and convert it into the currency that the hospital is expecting. And then, a daily bulk payment and reconciliation file is sent to the hospital for all of the payments received, detailing exactly who has paid, funds in transit and other kinds of data.
Both companies say they have moved into the hospital space after setting up similar systems to help international students pay their university fees. These amounts are also large, like medical payments, and require similar handling.

Down to the wire 3

Healthcare vs education
In fact, Flywire’s founder began the company because of the difficulties he had as a student from Spain, getting his course fees to MIT in Boston, using traditional wire to wire bank transfer. “What happened in wire transfer was that it went into a black hole and came out at some point at a later date. Neither the receiver nor the sender knew exactly where it was and when it came out it was short because some intermediary banks took small amounts in fees out of it,” said Herrick.
Similarly, Western Union also started servicing the education sector, with over 600 higher education institutions as customers across 12 countries (paid by students from over 220 countries). “We found that many of our major US universities also had hospitals, and just like the growth of international students that we helped them address, they were seeing significant growth of the ‘medical tourist’ and were having problems receiving payments from patients overseas,” said Western Union’s Tiberi.
Not many hospitals were keen to admit their reconciliation systems needed help. But one of WU’s customers said its tools had helped immensely. “Our hospital can quickly identify wire transfers and post the payments to the appropriate account in an efficient and effective manner,” said Chris A Arroyo, business operations lead, Florida Hospital.
However, there is a difference between healthcare and education. That is, healthcare payments are a little less predictable; something that international payment systems need to manage. For instance, there are many more refunds in the healthcare sector. That’s because, in many cases, the patient pre-pays for a medical procedure, and then ends up having something slightly different; perhaps they spend less time in hospital or require less medication. “The hospital will issue a refund to the patient,” said Tiberi. “Given that the patient has come from overseas, the hospital then has the challenge of having to get the refunded money back to them.”

Watch this space
It is unclear whether other technology or wire transfer companies are looking at the space. What is clear, however, is that it’s a fledging market with potential elsewhere.
For Flywire, Asia presents very particular opportunities, says Herrick. It is a vibrant market and digital payments are accepted widely. It says it will be analysing distinct markets to understand how people pay, the most popular types of payments (for instance most Chinese adults tend to have a China UnionPay credit card attached to their bank accounts and WeChat is popular).
And it will also need to develop relationships in markets where cash is still very prevalent (some hospitals even have moneylenders on site to convert cash payments into local currency). But converting cash is an expensive business and hospitals need to be aware of money laundering too, said Herrick.
Western Union, which says it deals mostly with international patients coming to the US from China and Saudi Arabia, is waiting for some of the digital payment systems to become more flexible.
Many are not currently designed for high principle transactions and have limits that restrict the size of the payment they can accept. “For example, with WeChat Pay this is less than US$7,000,” said Western Union’s Tiberi. “As these alternative payment methods begin to raise their transaction limits, they can then become viable as a way to pay hospital providers.”
It says it has started to incorporate these alternative payments methods, such as AliPay and TenPay. “We are ready to start accepting payments via these methods as soon as they are ready to support larger transactions,” he said.