Patients Need More Options to Avoid Crushing Medical Debt

By Betsy Giordano

Companies large and small are recognizing the value and necessity of corporate social responsibility (CSR) – the idea that it’s not enough just to do well, you have to do good.

Corporate responsibility falls on all businesses from the Disneys and Targets of the world to local medical practices. A recent Care Cap Plus survey found that a third of consumers say they would be more likely to use a medical practice that gives back. So what if the execution of CSR not only made the world a better place, but also had the potential to grow the medical practice?
In other words, what if a physician group could attract more patients and increase patient satisfaction, loyalty, and referrals by alleviating the biggest driver of financial ruin for consumers: medical debt?

This is Financial Literacy Month, when consumers are flooded with stories about how to avoid financial traps, missteps, and mistakes, usually putting the responsibility squarely and solely on the shoulders of consumers themselves. But medical debt is a tough problem for consumers to tackle unassisted. When unforeseen complications drive unexpected medical expenses, or large deductibles and copays translate into compounding debt – especially when it lands on a credit card – consumers enter a downward financial spiral that’s hard to course-correct.

Consider that 32% of American workers have medical debt and more than half have defaulted. And for many, the weight of that debt is heavy indeed – 28% of those who have an outstanding balance owe $10,000 or more on their bills. And 68% of Americans still haven’t paid off hospital bills dating back to 2016.

Is it any wonder that health care debt is the number one cause of bankruptcy? As some in the healthcare industry pass the buck, Americans are passing the hat: Currently, one in three Go Fund Me accounts are for medical expenses.
And all this debt isn’t affecting only consumers’ financial health, but also their bodily health. Nearly two-thirds of Americans under 65 say they went without needed care, and 40% have relied on home remedies or over-the-counter drugs, instead of going to a doctor because of the cost.

Unfortunately, many of the existing medical finance solutions are aggravating the problem. Medical credit cards frequently carry high interest, fees, and penalties if patients miss or are late with a payment, often ruining consumers’ credit scores. With many Americans struggling financially especially since COVID, that scenario is playing out more and more – to the point where the Consumer Financial Protection Bureau issued a statement of warning to consumers.

The solution requires the participation of medical practices and providers– and there is no more relevant corporate social responsibility than helping patients pay for the care they need and want without running up debt.

Several years ago, we began analyzing whether there was a better way to assess who could be a good risk to pay back a medical bill, without focusing solely on the credit score. This analysis led us to create an algorithm that predicts, with high reliability, who can be trusted to pay a bill over time, even if they have credit scores as low as 400 and without risk to the medical provider.
We began working with medical practices to offer an alternative payment method, at their discretion – at minimum to those patients who didn’t qualify for traditional medical credit cards but regardless have a high propensity to pay. Our payment options pose no risk or harm to consumers nor to their credit profile. This alternative creates a payment partnership between the patient and the medical provider. The patient makes a financial commitment up front and the provider pays a nominal servicing fee that pales in comparison to attorney collection fees.

The results have been stunning – over 99% of patient payments are successful over the 12-month payment plan. Even better, these patients became brand evangelists, praising the practice, referring new patients, and returning for more care themselves. The medical practices have regular deposits in their bank accounts, and don’t have to face the PR nightmare of chasing down payments from patients.

Instead of facing a collection agency or dealing with the stress of legal demand letters, these patients hear from a warm human. This gives them a person who touches base regularly, works with them to accommodate changing financial circumstances, and reminds them that their medical practice cared enough about them to pay the servicing fee for them so they could afford care.

This experiment in doing well by doing good has turned into a thriving business, allowing medical practices and hospitals alike to get out of medical collections and in turn, helping their patients tackle the problem of medical debt. The lessons learned are powerful: Most patients want to pay their debts, if offered a workable and humane way to do so. Treating people with basic respect and caring pays dividends. Medical debt is everyone’s problem and, working together with a focus on the patient, we can make it better.

Betsy Giordano is Chief Operating Officer of Care Cap Plus, LLC.

View the original article on Healthcare Business Today here.