Libra is a new kind of currency announced in June by Facebook. It is, at its heart, a new blockchain-based, crypto-currency. While there remain several potentially steep legislative hills to climb, Facebook is targeting 2020 for an initial public introduction of Libra. So next year, if a patient walks into your practice and asks if you accept Libra, don’t be surprised.
Do you Accept American Express?
Have you ever asked this question? Has your practice ever been asked? Today, accepting multiple forms of payment from patients is almost a requirement of doing business.
It wasn’t long ago that the convenience of being able to pay by credit card was not something you could assume. Today, most businesses, including medical practices have learned that despite the fees associated with them, accepting credit cards not only represents an improved level of service for patients, it leads to an increase in net revenue over time.
Many practices lag behind retail establishments, slow to adopt credit-related payment conveniences such as Card-less Apple and Google Pay. You may soon find yourself faced with a new question.
Do you Accept Libra?
Libra is a new kind of currency announced in June by Facebook. It is, at its heart, a new blockchain-based, crypto-currency. While there remain several potentially steep legislative hills to climb, Facebook is targeting 2020 for an initial public introduction of Libra. Delays aside, if a patient walks into your practice and asks if you accept other forms of pay, don’t be surprised.
Now, before you grab your torch and pitchforks, and begin attacking the benefits and pitfalls of Bitcoin, it is essential to understand the foundational differences between Facebook’s proposed currency, Libra, and the “crypto-currencies” you may have read about (or even invested in).
Three of the most significant ways Libra differs from cryptocurrencies such as Bitcoin or Ethereum are:
- Facebook’s Libra, while not a recognized currency in the eyes of the Federal Reserve, would be backed initially by “real” money. To lend stability to Libra’s value, Libra would be tied to the value of the US Dollar, English Pound, European Union Euro, and Japanese Yen. Furthermore, Libra’s financial backing would not be held by Facebook, individually, but by a consortium of about 30 to 100 member companies, supervised by the Swiss Financial Markets Supervisory Authority. While Facebook states it would maintain primary control of how and who may facilitate the use of the currency, it is willing to give up most of its oversight.
- Facebook may issue additional Libra based on demand. Libra can not be “mined” like Bitcoin and would not require member companies to perform energy-demanding, trust verification steps, such as solving complex computational hashing. At least at first, Libra would be backed by traditional currency.
- The second and equally important quality that differentiates Libra from the existing crypto-currency ecosystem is its blockchain-based ledger. The master ledger that tracks, verifies and clears all Libra transactions, while based on a cryptographic blockchain, would not use an openly distributed network but, instead, would rely on a blockchain ledger distributed only among a consortium of publicly disclosed, “trusted,” member companies. In addition, Libra would not suffer from the scalability issues that have recently plagued currencies like Bitcoin and Ethereum.
In the end, you have to ask yourself, would you trust Facebook to hold a portion of your revenue (like a bank) if it meant your practice could get paid more regularly by its patients?
Alternative Payment Methods are Attractive to Patients
So why might a new currency, such as Libra, be attractive to patients?
The answer is rooted in the same business model that allows Facebook to offer so many of its services for free. While Libra may function like a credit card for your practice, patients may “feel” the financial costs of Libra payments more indirectly than if they pay with cash or an ordinary credit card. Accepting payment in Libra could allow your practice to collect its full copays more regularly.
Just one potential benefit to patients’ paying in Libra, is that upon conversion of Libra back to dollars, Facebook could “subsidize” some or even all of the cash value of the payment through the data it collects from the individual. Libra would then, at its core, represent a dividend, paid by Facebook to its users, in the form of a subsidy derived from its application of an individual’s data trail.
Tech Giants – a Savior for Healthcare?
Running a medical practice is expensive. Getting paid involves an intricate symphony of medical professionals all working together in what is often a time-consuming and frustrating process. As a result, collecting at least some payment at the time of a patient’s visit is increasingly more critical to the smooth operation of a medical practice. These payments may appear relatively small, such as a copay, but add up quickly if not collected.
In an example provided by the American Physical Therapy Association, even a small practice consisting of only two full-time Physical Therapists can accrue nearly $200,000 each year from copays, alone. The chance of collecting those copays drops by 20% the moment the patient leaves the clinic. Collecting payment at the time of a patient’s visit is a high priority for profitable clinics.
Notwithstanding how insignificant a single copay may appear to your practice, medical expenses have become a substantial burden on many individuals and, in the case of an unexpected illness can, quite literally, break the bank. Financial stress brought on by medical expenses is bad for your patients and your practice.
The US medical “system” is under crushing financial stress. With the many patients, medical professionals, and organizations now observing its impacts on care, and the political healthcare ecosystem hopelessly locked in a stalemate, tech giants are quickly turning their attention toward healthcare. It may only be these tech giants with sufficient capital and influence that can mend a seemingly broken system.
Accepting Alternate Forms of Payment Could Be Critical to Your Practice
Facebook and most of its myriad features and services are offered at no cash cost to its over 2.3 billion active users. That’s a huge user base—indeed, a quarter of the world’s population—and the value Facebook gleans from its users is currently close to five-hundred billion dollars. Given these few statistics, would you, as a medical professional, be willing to accept payment in Facebook Libra, instead of dollars?
Sound far-fetched? Maybe. Facebook, along with some of the world’s most trusted and influential financial organizations, however, are betting you might be willing to try. The US Government has suggested that Facebook may have to register as a bank to proceed with the project. Facebook has informally agreed to abide by all US regulations as it moves forward with the project. Facebook’s Libra project launch date is 2020.
The way things are going, alternative methods of payment such as Libra, may be critical to the ability of small to medium-sized practices to continue to offer the highest level of care to their patients. Given a little time, new, alternative payment methods such as Libra may just become the next “credit card.”