Hospitals, Advocates Battle Over Patient Credit Checks

Credit checks by hospitals are becoming more commonplace, as the industry seeks to identify those patients to pursue for payment and those patients who are eligible for charity care or government assistance, according to an article in The Wall Street Journal today.

According to the Journal, nearly 5,000 community hospitals provided some $31.2 billion in uncompensated care in 2006. Hospital administrators hope that credit checks will help them minimize losses from bad debt, charity care and uncompensated care set asides. Industry experts say those expenses are growing because more Americans have become responsible for a greater portion of the medical costs. Meanwhile, medical bills are often the last bills to be paid, even by consumers with good credit.

InsideARM has been reporting on this growing trend, covering the startup firm Healthcare Analytics ("MedFICO Will Find Those ‘Most Likely to Pay’: Developer," Dec. 20, 2007) as it develops a scoring tool designed to help health providers manage and judge customers’ ability to pay their healthcare debt. The company recently hired John Moroz ("Healthcare Analytics Beefs Up Executive Ranks with Moroz Hire," March 3) a frequent speaker at industry events and an expert voice in the growing healthcare receivables sector, to help market the product, which is due out this fall. Moroz had been with CarVal Investors.

In addition to determining which patients can pay and how much, Healthcare Analytics hopes the product will be begin to establish an industry standard for the discounts that are applied to patients with balances.

Consumer advocates have said that some hospitals could misuse the information by denying or cutting back on a patients’ care if they can’t pay. Some have said that hospitals might encourage some patients to tap into their credit lines to pay for procedures or debt, according to the Journal story.

"It has the potential to put people at risk financially," Mark Rukavina, executive director of the Access Project told the Journal. Access Project is a research and advocacy group that focuses on medical debt.

By law, hospitals are forbidden from turning away patients in an emergency. Private hospitals, however, typically aren’t required to provide non emergency treatment.

Many hospitals now use a credit score developed by credit bureau Equifax Inc. that tries to predict if a patient will pay a medical bill. The score is obtained by matching a patient’s previous hospital payment records with the patient’s credit reports.