Health care systems have long looked for new ways to collect patient accounts, particularly as deductibles rise and patients find it more difficult to pay outstanding balances. A new trend involving a partnership with banks - thus removing the in-house component - appears to be gaining traction.

In St. Louis, health system SSM Health Care, for example, started a relationship with Commerce Bank in March to offer interest-free loans. Patients' credit, bank records and assets are not checked in order to qualify. The program already has resulted in loans of $6.5 million with three-year and five-year terms to approximately 4,000 patients.

SSM hopes the loans ultimately will reduce the system's bad debt, which totaled $204.7 million last year compared with $157 million a year earlier.

SSM can submit payment information to Commerce Bank when a patient expresses interest in the program. A patient with a balance of $7,000 or more for hospital services is eligible for a five-year term loan. There is no minimum payment but the first payment must be $300, Paul Sahney, vice president of revenue management for SSM Health Care, told the St. Louis Post-Dispatch, in an article published over the weekend.

Anyone with a hospital bill of more than $300 is eligible for the loan and nobody is denied the interest-free loan even if it appears they have no ability to pay. If a patient stops paying, SSM is then in charge of trying to collect.

Hospitals traditionally work out in-house payment plans but many in the medical field believe hospitals are not always equipped to manage monthly payments from patients - at least not in the way banks already do with other types of accounts.

Joseph Fifer, president and CEO of Healthcare Financial Management Association, said patients may be more inclined to a pay a bill from a bank rather than one from a hospital.

Mark Huebner, vice president of health care banking for Commerce Bank, told the Post-Dispatch that the bank invested several million dollars in its IT system about three years ago to help with issuing the interest-free patient loans. The bank made the investment after seeing a jump in out-of-pocket balances for patients. Under the deal with SSM, Commerce receives a service fee for administering the loans.

Executives with Oregon-based CarePayment, which offers a plan similar to Commerce’s program, reports business is strong - with double-digit growth in the past year - as more providers, mainly hospitals, look to partner with the finance company.

Chesterfield, Mo.-based Mercy Health began working with Commerce more than a year ago to offer loans to patients. Mercy recently revealed it will switch to interest-free loans for up to a five-year term instead of a just a three-year option.

According to a Missouri Hospital Association report, Missouri hospitals' overall bad debt totaled $493 million in 2013, up from $486.5 million in 2012.

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