Start-Up Card Outfit Has Installment Plan For Hospital Bills

A start-up company is planning to make its mark in the medical industry by offering private-label cards to people with hospital expenses, regardless of their credit histories.

Launched a year ago, United States Medical Finance Corp., Tallahassee, Fla., offers only one product: a credit card called USMed card.

So far, the firm has garnered 1,500 cardholders from a contract with a hospital in Sanford, Fla.

Within two months United States Medical's president and chief executive, Gregory A. Wilkerson, expects to sign up at least five more hospitals as the company launches a national marketing campaign.

The USMed card covers all expenses of a hospital patient that are not covered by insurance, such as deductibles and copayments. People without insurance who are unable to qualify for government aid are also eligible for the card.

"Our program is a complete outsourcing solution for hospitals," said Mr. Wilkerson, who refers to his business as a billing and collection service.

United States Medical benefits through late-fee and interest charges, which are based on the prime rate plus nine percentage points. There is no annual fee.

And hospitals benefit from the arrangement because they get money they normally wouldn't. The hospital receives the principal from cardholders' payments.

Mr. Wilkerson said research shows that most people consider paying a hospital bill a low priority. In Florida, for example, hospitals that are owed money by patients collect only 30 cents for every dollar they bill.

United States Medical does not assume any credit risk if a customer defaults. It's the hospital, which determines the cardholder's credit limit based on an estimate of its cost of services, that loses out.

The card company, however, does pay the hospital a part of the bill before the patient makes any payment, based on a calculation that looks at the hospital's past record of collections.

"If we end up sending half of our accounts to a collection agency," Mr. Wilkerson said, "I would consider that very successful, considering that hospitals typically recover only 30% of the money owed them by self-paying patients."

If after 120 days a patient is making no payments, United States Medical refers the account to Equifax Inc., which handles collections, application processing, and billing queries for the USMed card.

Total System Services Inc. is responsible for processing the cards. This is the Columbus, Ga.-based company's first foray into the health care processing business.

There is no typical credit limit for the USMed card, Mr. Wilkerson said. In-patient credit limits generally are about $2,000, but out-patient limits vary.

Cardholders are required to pay the greater of $50 or 10% of their bills a month. Bills typically take about a year to pay off.

However, patients who lack insurance and therefore owe much more are not expected to pay off 10% monthly.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER