As the ranks of the uninsured and medical debt continue to rise in this country, hospitals have a variety of options for dealing with patient collections.
The more traditional includes referring delinquent accounts to collection agencies, taking the writeoff or suing. This hurts the patients' credit and is among the reasons why medical debt is the number one driver in the United States behind personal bankruptcies.
Another option in the case of deceased patients is to file a claim against their estate. Some hospitals have been embracing this approach, but for PR reasons they haven't exactly been broadcasting it.
Then there's a hybrid approach: Outsourcing collections to a third party, but taking a softer line with patients and their families. That's the service offered by a San Diego firm called CSI Financial Services, which has provided financing to about 1.8 million patients since the early 1990s.
CSI offers traditional patient financing and account management, but it also can provide other options, such as zero percent, long-term financing. If the patient is late making a payment or defaults, the credit agencies aren't notified. Credit history is not taken into account when the financing is provided.
That option, known as ClearBalance, has become increasingly popular with CSI's clients, CEO Mitch Patridge told me in a recent conversation.
"Hospitals are looking for better solutions for their patients," he said.
CSI has about 200 clients throughout the United States, primarily hospitals and clinics. They include big institutions like the Ochsner Clinic in Louisiana, Sharp Healthcare in California and Virginia Mason Medical Center in Seattle. More than half are using the ClearBalance option, according to Patridge. That 90 percent of the patients enrolled in the plan pay off their debts may have something to do with it.
"If you treat the patient better, you get a better net recovery," Patridge said.
One recent convert to CSI is Palomar Health near San Diego. The two-hospital system makes an annual provision for bad debt that totals about $55 million a year, according to data it submits to state regulators. That's about 5 percent of its revenue.
"We understand many (patients) are facing financial hardships and we would very much like to help them meet their financial obligations," Palomar Corporate Controller Tim Nguyen said in a prepared statement.
Patridge is confident the soft touch will boost Palomar's collections. If the firm continues replicating its success, hospitals could eventually take an entirely different tack in how they settle patient bills. - Ron (@FierceHealth)
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