Growth in Self-pay Account Balances Spur Interest Free Consumer Finance Programs

Higher co-pays and deductibles are contributing significantly to the rise in self-pay balances and bad debt expense, placing greater pressure on hospitals to collect payment from patients at the point of service.

The trend is leading vendors who serve the industry to create new patient debt financing options, like those offered by CarePayment.  The Aequitas Capital Management subsidiary recently teamed with credit information bureau TransUnion to market a patient finance card to TransUnion’s hospital clients, said Mike Snitman, vice president of TransUnion’s healthcare group.

Snitman said the service allows hospitals to offer all of its patients a long-term, interest-free finance card to pay their medical bills, while improving the hospital’s cash flow and yield from self-pay receivables.

“It’s non-discriminatory,” Snitman told insideARM. “CarePayment will issue a card to all patients regardless of their credit history.”

Steve Wright, senior managing director of health care markets for Aequitas Capital said CarePayment has helped its clients achieve significant improvement in their overall self-pay accounts.

“Hospitals offering CarePayment have experienced average net collection results of 40 percent, compared to 20 percent or less prior to implementing the program,” Wright said in a press release.

Snitman said the service works by offering those patients responsible for any portion of their bill or ineligible for public or private assistance the ability to pay their balance over 24 months. Patients can be enrolled in the program when they are being registered for care and are pre-approved with a valid Social Security number and other identity-matching information verified by TransUnion’s Revenue Manager service.

Once approved for the finance card, a patient’s monthly payments equal 4 percent of the outstanding balance, or $25, whichever is greater.  If new charges are incurred, the balances are combined and the monthly payment is divided over another 24 months.

Snitman said hospitals receive full payment of the patient’s outstanding balance, less a negotiated fee, within three days of the charges on the card for low-risk patients.  Hospitals receive full funding on balances held by higher risk patients after the patient has made three consecutive payments. Charges CarePayment cannot collect on are returned to the hospital, Snitman said.

“We’re not buying the receivables, we’re handling it for the hospital,” he said.

Additionally, he said CarePayment provides hospitals with monthly statements of a patient’s balance, inbound and outbound customer service calls, payment processing, reporting, and late payment management.