The True Cost of a Poor Patient Billing Experience

The best patient experience doesn’t start or end in the exam room.

From the clinical team’s perspective, everything can go “right”--the visit feels compassionate, competent, and thorough. But for patients, the experience isn’t over when they leave the office. It continues when the first bill arrives.

The best patient experience feels effortless end-to-end. Cost estimates are communicated upfront, patients understand what they owe and why, and payment (with their preferred method) is quick and intuitive.

When billing workflows are clunky and inefficient, patients notice. Confusing statements, surprise balances, and hard-to-use portals can overshadow even the best clinical care. It drags down customer satisfaction (CSAT), erodes patient-provider loyalty, and damages your brand. It also introduces friction and delays into the payment process, adding pressure to provider margins and cash on hand.

In other words: broken billing breaks the patient experience, which in turn creates financial strain for practices.

Signs of a poor billing experience include the following:

• Patient statements are unclear, unexpected, and/or long-delayed
• Patients receive multiple bills for one appointment
• Patients are surprised by insurance coverage (or lack thereof) or outstanding balances
• The payment system is difficult, outdated, and/or lacks payment plan options
• Billing support is hard to reach or unable to help
• High patient abandonment and patient churn

A subpar billing experience is more than a minor annoyance for patients--it’s a revenue drain for practices. Poor billing experiences create delays, inconsistencies, and frustration for patients and staff alike. The costs of a poor billing experience show up in several areas:

Decreased Patient Satisfaction KPIs

The financial side of care is critical to overall patient satisfaction, but many patients find themselves frustrated by the process. Nearly 40% of Americans found their healthcare billing to be confusing, and 45% were unexpectedly billed for care they thought their insurance plans covered.

Patients are frustrated by outdated payment systems, inflexible one-size-fits-all payment schedules, clunky patient portals with poor (or no) mobile functionality, and lack of modern payment options (e.g. digital wallets).

When patients can't understand their bill or pay it easily, they may delay payment or abandon it altogether. If the billing process was clearer, 43% of patients would pay their bills quicker. And if digital wallet options were available, at least 27% of patients say they would use them.

Walk-outs

A patient initiates care--submits a web form, calls to schedule, completes digital pre-registration, or even arrives in your lobby--but never makes it to the appointment. Your marketing and referral base have done the heavy lifting, but then the visit evaporates--and so does the revenue. Unlike a no-show, early attrition is born inside your own front-door processes. The root cause is usually friction in registration, financial clearance, or check-in.

Chalk this early patient attrition up to staffing challenges, burned-out front desks, and outdated processes. For example, consider the 10–15 minutes many teams still spend hopping payer portals, interpreting 271s, or calling for eligibility verification and benefits checks. That delay creates lines, anxiety, and second thoughts. Cost opacity amplifies the effect: when a patient can’t get a plain-English answer to “What will I owe?” until after the visit, they hesitate. Inconsistent scripts and tools across sites and specialties add confusion, and increasing patient cost burdens (from high deductible health plans, expiring ACA subsidies, and a general shift from payers to patients) raises the stakes--patient responsibility is higher, so unclear numbers trigger more walk-aways. Finally, when eligibility is a handoff instead of an action--“We’ll verify and call you later”--patients interpret that as too risky and exit.

Negative Impacts to Brand Reputation

A patient’s experience with the financial side of care is a deciding factor in whether or not they choose to return to that provider in the future. And a poor financial experience will lead many patients--perhaps four out of every ten patients--to leave a negative review of the provider.

A clunky, outdated, or error-prone billing process drives patients to other providers. As word gets around on public review sites and via word of mouth, patient acquisition gets tougher. When patient loyalty suffers this way, it creates an uphill battle for providers to maintain financial stability, let alone grow.

Frustration for Staff

Staffing is the biggest challenge for most medical practices. Poor internal processes, with too many manual and repetitive tasks, exacerbate industry-wide issues of burnout and turnover.

Revenue cycle departments are short-staffed, leading to higher stress and burnout among skilled RCM specialists. Routine billing questions, many of which can be answered by online resources and AI-powered support, take up significant amounts of staff time. When subpar tools and tedious manual processes add to an already heavy workload, staff frustration grows--and turnover rates rise. If issues continue over time, it damages the provider’s employer brand and ability to recruit high-quality candidates in the future.

“While patients lack visibility into the financial and operational functions of healthcare, they most definitely feel pain when those areas of the business are suffering. Consequently, staffing shortages are hitting providers with a double whammy of lost revenue and decreased patient satisfaction.”

Report: Short-staffed for the long term (Experian)

Errors, Delays, and Write-offs

An inefficient billing process results in more errors, which cost time and money to resolve. Errors cause claim denials and unnecessary delays, driving up average time to collect (DSO) and bad debt.

On the patient side, small speed bumps result in major costs. Patients are less likely to pay when:

• The billing and payment process is inconvenient: it requires the user to remember a login, it’s not mobile-friendly, and/or it’s clunky to use‍
• Technology is not up-to-date: patients can’t use their preferred payment method, like digital wallets, or access support when needed

By failing to optimize certain steps early on, like patient intake and pre-service/point-of-service payments, providers increase their cost of patient follow-up. Staff spend time chasing balances that could have been handled already — or avoided in the first place.

Aside from claim denials, issues in the billing workflow--like missed or unbilled charges, payment posting errors, and patient collections сhallenges--are the most common causes of revenue leakage. When providers wait too long to bill patients, fail to set expectations upfront, or make billing workflows an afterthought, it puts self-pay and copay revenue at risk.

“Self-pay after insurance accounts were responsible for nearly 60 percent of patient bad debt in 2021, compared to 11 percent in 2018.”

Report: High Out-of-Pocket Costs Led to Low Patient Collection Rates

A rise in patient balances and bad debt makes the patient financial experience an essential priority for RCM teams. Hospitals are collecting more than 30 percent of their revenue from patients--a significant increase over years past--and the number of balances over $7,500 has increased significantly.

Patient Churn

Patient dissatisfaction often begins with lagging intake--but the real damage compounds after the visit. A paper statement arrives weeks later with codes and totals that don’t match the patient’s mental model of the encounter. The amount feels abstract: no context for what insurance paid, what adjustments were made, or why a deductible applied. The patient opens the bill at 6 pm, has a simple question, calls the number on the statement, and lands in voicemail because support keeps 9-5 office hours. They put the bill aside “for tomorrow,” and tomorrow turns into a month. In the background, the system keeps sending paper reminders on a 30-day cycle, so the patient experiences billing as a series of interruptions rather than a conversation.

Finally, the patient is sent to collections, which threatens recourse. This is often the final straw upon which patients “take their business elsewhere.”

When life gets busy or money is tight--especially during deductible season--uncertainties become reasons to delay care or switch providers. Clinically, you may have done everything right; operationally, the experience felt unpredictable.

Financially, churn shows up as lower lifetime value and higher acquisition costs just to hold the line. Operationally, you see longer “days to first payment,” higher write-offs, rising rework as staff field the same “Why is my balance this amount?” calls, and uneven provider utilization as follow-ups slip. This is the hidden tax of a billing journey that forces patients to chase clarity.

When Compliance & Legal Risks Become Real Costs

The poorest patient financial experiences are actually illegal.

Consider the No Surprises Act: if your estimates are inconsistent, your eligibility data is stale, or patients end up with illegal surprise bills, HHS can impose civil penalties up to $10,000 for each violation.

“Each violation” is not one fine for the whole organization--it can be dozens or hundreds of encounters over a period of time.

But even those numbers are just the visible tip of a much larger iceberg.

Violations mean costs

Once a billing or access problem crosses a certain line--surprise bills, wrong balances sent to collections, ignored record requests, or a pattern of patients effectively blocked from care--you’re no longer dealing with a disgruntled patient. You’re dealing with claims, class actions, and regulators.

From a CFO’s seat, the decision tree usually collapses into three paths:

Settle early and quietly.

You investigate, bring in outside counsel, fix the obvious root causes, issue refunds or credits, and negotiate a settlement with affected patients (or a small class) before things explode. All-in, that often lands in the low- to mid-six figures for a modest incident at a regional organization: legal fees, remediation, refunds, and some reputational triage.

Fight it out.

Maybe you feel you’re right on the law or the facts. You litigate or go through arbitration, often for 12–24 months. Legal fees accrue month after month; experts are hired; executives and managers lose time to depositions and discovery; parallel remediation is happening anyway because you can’t leave the underlying issues unfixed. It’s not unusual for defense costs alone in a complex healthcare matter to reach high six or seven figures, even if the ultimate damages are small. You “win,” but your P&L looks like you lost.

Lose big, with regulators watching.

This is the nightmare scenario: a major privacy or billing failure, combined with evidence of weak internal controls or a pattern of behavior.

Now you’re looking at:

• substantial settlements or judgments (often multi-million-dollar range for larger systems)
• plaintiffs’ attorneys’ fees,‍
• civil monetary penalties under HIPAA, the No Surprises Act, or state consumer-protectionlaws
• mandated corrective action plans and reporting accelerated, unbudgeted investment in technology and staffing--on the regulator’s timeline, not yours.

By the time you add defense costs, penalties, remediation, and long-tail reputational harm, the total economic impact can climb into the tens of millions for a large health system. And all of it started with “just” a broken billing workflow.

Why this is a finance problem, not just a compliance problem

It’s easy to view all of this as “compliance’s job” or “legal’s problem.” But the structure of your patient billing experience--eligibility, estimates, statements, collections, refunds, access rules--is a capital-allocation decision. Underinvest in modern, integrated systems, and you’re effectively choosing to a portfolio filled with risk:

• regulatory penalties,
• multi-million-dollar breach and class-action events,
• high litigation spend,
• forced remediation under consent orders, and
• long-term revenue erosion from lost trust.

Invest in a better stack, and you’re not just reducing cost-to-collect; you’re shrinking the attack surface, standardizing how patients are treated, preserving evidence of good-faith compliance, and making it much easier for your attorneys and compliance officers to defend the organization when --not if--something is challenged.

In other words: a good patient billing experience isn’t just a patient access win. For a finance leader, it’s a pragmatic and leverageable form of risk mitigation--and it’s one you can buy instead of hire.

The Cumulative Impact on Revenue

Patients expect the billing process to be accurate, streamlined, and digitally-enabled. They expect accurate cost estimates before service and clear patient statements afterward. When providers fall short of these expectations, revenue suffers.

Consider this example:

Maple Heights Medical Center: a (fictional) regional hospital

• Operates in a suburban area with a population of 75,000
• Dated billing system, relies on patient portal (with low adoption), does not leverage AI or automation
• $300 million gross revenue per year
• $150 million net revenue after contractual adjustments and bad debt
• $10 million profit last year
• 25 people employed in billing, AR, and RCM roles

Consider the costs of a subpar patient billing experience for Maple Heights. If Maple Heights earns 12% of its $10M annual profit from patient self-pay and copays, a poor patient billing experience puts $1.2 million in annual direct self-pay revenue at risk.

The poor experience will cause a certain percentage of patients not to return. Let’s take an average patient lifetime value of $63,000*--this could be higher for providers who serve primarily chronic conditions, aging populations, or self-pay services, and it could be lower for organizations with relatively low-utilization patient populations.

Maple Heights serves ~17,500 patients annually, and 15% (5,625 patients) encounter billing issues. Of those patients who have issues, 20% take their business elsewhere (525 patients). This adds up to an estimated $33 million in potential lifetime revenue that the provider will miss out on due to a poor billing experience. If the rate of billing issues was slightly higher, say 20%, the provider stands to lose $44 million total lifetime value.

If Maple Heights files ~130,000 claims per year and 20% of those claims (26,000) are initially denied, ~32% (just 8,320 claims) will be resubmitted with corrected information. This means 17,680 claims slip through the cracks; at an average of $2,030 per claim, this is a loss of $36 million per year.

The inefficient and ineffective RCM processes frustrate RCM staff. If the cost of turnover is up to 4x an employees’ salary, losing one employee with a $49,000 salary costs Maple Heights up to $196,000 in recruiting, onboarding, training, and other expenses. If they experience the typical range of 11-40% turnover for their department, it means the facility stands to lose anywhere from $539,000 to $1.96 million per year from employee turnover in the RCM department.

* Patient lifetime value: estimating a relationship duration of 8-12 years x annual revenue per patient of $6,000-6,500 = patient lifetime value between $48,000 and $78,000 = rough average of $63,000 per patient.

The Total Cost of a Poor Billing Experience

Patient frustrations--like unexpected bills, billing errors, long delays in the process, confusing billing statements, and lack of support for billing questions--have a measurable impact on revenue.

There are many strategic optimizations leaders can make to improve the billing experience. Beyond tactics, many revenue cycle leaders are improving their patient billing experience with technology. Leading solutions apply cutting-edge innovations like AI and automation to improve every step of the patient journey.

Healthcare providers using Collectly boast a 95% patient satisfaction rate, effectively avoiding CSAT-related revenue leakage. Moreover, our partners reduce patient billing overhead by 80-85%, and help providers like Pyramid Healthcare increase timely payments by 75%.

See how Collectly and our AI agent for billing and RCM can transform your revenue cycle operations today!