As patients' deductibles continue to rise, leaving them unable to pay for services in one lump sum, health finance experts say hospital officials are looking for creative ways to collect on patient balances.
Five months ago, SSM Health Care inked a deal with
Since the program was launched in March,
The interest-free option is the main reason why the loans are popular, he said, in addition to not checking a patient's credit, bank record or assets.
"The need for something like this has always existed," Sahney said. "Out-of-pocket costs, which is the deductible, co-pay, will continue to rise very significantly over the next five years."
The average annual deductible is
Hospitals have long worked out payment plans with patients in-house and still do at
But some say working with banks might make more sense for hospitals.
"They (hospitals) have not had robust collection efforts for payments from individuals," said
Sahney agrees. He said his hospitals are not positioned to effectively manage monthly payments from patients like banks already do with home and car loans.
Plus, a patient may be more inclined to a pay a bill from a bank rather than one from a hospital, Fifer said.
"A consumer might act differently if a bank is trying to collect something than a hospital is," Fifer said.
Sahney expects the new relationship with Commerce, which receives a service fee for administering these loans, will ultimately drive down the health system's bad debt, which totaled
After seeing an "explosion" in out-of-pocket balances for patients, Commerce invested a few million dollars in its IT system about three years ago to make it very simple to issue these patient loans.
SSM can easily submit the payment information to the bank when a patient expresses interest. From there a patient with a balance of
Anyone whose hospital bill is more than
If a patient stops paying or defaults, SSM "would then be the ones to move forward with attempts to collect," said SSM spokesman
Before working with Commerce, SSM managed a payment plan for patients' in-house. The program allowed patients to pay back their balances over a 12-month period. Since partnering with Commerce, this payment plan has been reduced to less than six months.
SSM isn't the only local health system working with Commerce.
About a year ago, Chesterfield-based
Like SSM, Mercy will now switch to interest-free loans for up to a five-year term instead of a just a three-year option, said
This trend of hospitals joining forces with financial institutions to provide loans to patients is catching on in other markets across the U.S.
"We've seen a significant uptick in interest from providers in the last 12 months," said Chief Operating Officer
Terms vary by provider but typically reach up to
"It's great that everybody has access to insurance but at the same time the cost of that insurance and their out-of-pocket costs could be a barrier to actually getting medical care," said Garnier.
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