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
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
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 Commerces 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.
