Creditor Survey Underscores Anxiety about Current Economic Conditions

Impact of Broad Economic Forces on Recovery Performance [Combined Results]

Among all creditors surveyed, Consumer Debt Levels were cited by a majority of participants—60 percent—as having a “Major Effect” on their recoveries. Unemployment and Rising Food and Fuel Costs, at 56.5 percent and 50 percent, respectively, closely followed outstanding consumer credit as representing the second and third most likely sources of “Major Effects” on converting receivables to cash.

Interestingly, the numbers corresponding to “Some Effect” and “Major Effect” in each of the categories except Health Costs are more or less evenly distributed when responses from the healthcare industry and the financial services industry are aggregated.

Not surprisingly, those distributions shift markedly when healthcare credit grantors’ viewpoints are studied in isolation.

For healthcare creditors only, Health Costs garner the greatest percentage—62.5 percent—of “Major Effect” answers. The threat of Bankruptcy was also perceived by 62.5 percent of this group to influence recovery rates, but only to the extent of “Some Effect.”

Impact of Broad Economic Forces on Recovery Performance [Healthcare Results]

The one component indicated by an overwhelming majority of healthcare creditors, albeit restricted to the level of “Some Effect,” unexpectedly turned out to be the Housing Market. One might assume that increases in healthcare expenses would directly correlate to deteriorating recovery rates for hospitals and physicians, thereby rendering Health Costs (by percentage of responses and degree of influence) the most important factor for the healthcare industry. But it stands to reason that the widespread reach of the housing crisis, both in terms of geography and demographics, might be seen to circumscribe the impact of Health Costs, even when evaluated solely in the context of healthcare creditors. For Americans struggling to save their homes from foreclosure, credit card and hospital bills are apt to occupy a lower position on the totem pole of consumer priorities, at least in the minds of healthcare creditors.

With good reason, much has been made of late regarding the impact these factors have had on U.S. consumers and the economy at large. For creditors, these factors have only escalated the continued deterioration of collecting outstanding receivables as charge-offs and delinquencies across a broad spectrum of consumer credit products have continued upward, placing additional burdens on the recovery departments of these institutions.

Though the potential impact of rising bankruptcies, unemployment, and household debt levels remain a focus of concern for creditors, the results of the Confidence Survey show that the performance of internal recovery efforts have not been affected as adversely as presumed.