This is the second in a three-part series on new financing options for insured patient self-pay accounts. Here is the first part, and here is the third part.


To varying degrees, new entrants to the patient finance game are investing in the future to help providers and patients adapt to the new reality of HDHPs and the increase in payer diversity they’ve ushered in. 

For patients, these game-changing companies are working to gently land the “You really are the payer now” news, and help patients get empowered and stay in control. The intent to provide good “whole patient” care, including healthcare financial services, is made more powerful with a combination of technology, scale, partnerships and increased access. 

For providers, both patient satisfaction and bottom line get stronger if patients know their obligations and have a manageable way to meet them up front--at, or preferably before--the point of service. The field is wide open and very hungry for simple practice management solutions that prevent debt, neutralize risk, and improve debt recovery operations. 

Game Changer Profile: CarePayment 

The Basics 

CarePayment uses technology and analytics to partner with medical facilities and offer whole lifecycle, 0% APR financing solutions to patients for whom OOP payments are a particular burden. Backed by Cedar Springs Capital and Crestline Investors, and initially funded in part by the Kellogg Foundation and other impact investors, CarePayment sought to solve the problem of poor and working class people needing a better way to manage medical debt without going to collection and kicking off a storm of negative events.  Early risk capital supported a new model to the point where its results enabled access to more traditional forms of prime financing to bring costs down for patients. 

How it works 

For patients

  • Patients receive care from a hospital or other healthcare provider partnered with CarePayment.
  • At the point of service, patient ID and financial position is verified by an algorithm, and a consolidated report that suggests the right payment plan, or confirms eligibility for charity care, is generated
  • Once the patient’s insurance company pays its portion of the bill, if any, the provider may refer the remaining balance to CarePayment
  • CarePayment---regardless of a patient’s credit profile--- deploys a welcome kit to the patient. It contains a proposed payment plan for the outstanding balance that includes a 0% APR loan and low monthly payments.
  • If the account is in good standing, future charges are also approved and patient can begin repayment on those too. 

For providers

  • CarePayment’s program is funded by purchasing accounts-receivable of patients it deems most likely to re-pay, based on its proprietary risk-scoring algorithm, at a discount to their stated balance.
  • As patients demonstrate a propensity to pay, CarePayment purchases the remaining balance from the provider.
  • The Company offers all patients the same zero-interest, revolving-credit account and online account-management services, even for patients whose accounts it does not directly purchase.
  • CarePayment closes and returns unpaid patient accounts to the healthcare provider, who may later engage a collection agency. It doesn’t report to credit-ratings agencies. 

What it adds to the healthcare finance game

Important regulatory dialogue: what a collection company is/isn’t

    • The company bills itself an outsourced customer-service provider, not a bill collector. Its focus is increased revenue for providers, and improved patient satisfaction.
    • The company’s focus is on reducing bad debt, offering advance funding, and guaranteeing net financial improvement and a cap on recourse.
    • The company has engaged lobbyists to help them draw a line in the industry between its approach and that of debt collectors. Otherwise, any regulations pending or future that would stop hospitals from selling accounts before the 90-day mark could be troublesome for CarePayment’s business model.

Patient engagement to improve collection rates 

    • CarePayment offers 0% APR loans to all patients who don’t qualify for charity care on the premise that happy patients who are treated like customers instead of deadbeats are more likely to pay their bills.
    • The company offers co-branded informational and marketing materials, membership cards and PR to raise awareness in the provider’s community.
    • Since there is no application, there is no rejection and no impact on a patient’s credit score.
    • At any point, patients can learn about how to manage their medical financial needs, access their accounts or make a payment through a customer service portal. 

Technology to influence financial outcomes 

An easy-to-read, healthcare-focused financial insight report on each patient is generated at the point of service. This level of information, obtained early in the revenue cycle, can help the system recommend feasible payment plans, reduce days in accounts receivable, bad debt and costs to collect. The report enables: 

  • Validation of patient identity
  • Standardized charity care validation process
  • Cleaner downstream billing and collections processes, when needed
  • Compliance with financial clearance and assistance policies 

Providers, take note

  • CarePayment says it’s able to double collections at the point of service net of the purchasing discount and increase them an average of 50% even beyond the 60-day mark. On top of making capital available to providers, this has led to an improvement in providers’ financial performance, and has reduced bad debt.
  • The company’s results are at least in part driven by their work to get patients into a payment plan as early in the revenue cycle as possible, when the desire to pay is highest.
  • There is at least anecdotal evidence that offering a comprehensive, turnkey financial services program can be a differentiator in the medical marketplace.
  • A standardized approach to payment plans and collections can help providers get better insights into accounts receivable, and can help build a stable funding base.
  • CarePayment’s program includes mandatory staff training, ongoing monitoring and testing, and regular internal and third-party audits. This proactive compliance posture helps with, but does not remove, providers’ compliance obligations
  • An implementation team provides support to providers throughout the relationship by integrating with existing systems and processes, often streamlining workflows in the process.
  • A full account audit of transactions is ongoing to provide a full audit trail and transparency. This includes program management tools via a portal with detailed account information and reports, and a performance dashboard, ongoing assessments and analysis of financial data and historical patient-pay performance. This information is used to customize a solution that offers the most benefit to providers.

 Look for our second RevCycle Game Changer profile next week. Here is the first one.

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