Collections Hurt Patient Credit, Even After Payment

It's no secret that use of high deductible healthcare is on the rise, the amount of each deductible is on the rise and most patients are not prepared to pay their deductibles.  Insurance companies want the patient to have some skin in the game when it comes to their cost of care.  So much so that most contracts between providers and insurance companies specifically prevent the hospital or physician from discounting patient deductibles.

So patients have to pay more out of pocket and hospitals aren't allowed to provide discounts.  That certainly explains why, in a study of millions of consumers, the CFPB found 43 million people have overdue medical debt on their credit reports.  The math isn't hard to follow.  The part we can't understand is why that same CFPB study found that consumer credit scores may underestimate creditworthiness by up to 22 points AFTER the consumer pays off medical debt.  So even if the patient pays off medical debt that had gone to collections, their credit does not rebound to an appropriate level.  That sounds like a pretty horrible cycle.  Consumers can't afford to pay their medical bills so they go to collections.  Their credit scores drop.  They finally pay off their bills, and their credit scores do not rebound.  Now the next time they need a medical procedure, they are doing so from a damaged credit position so their access to capital is worse so they are likely to end up in collections again.

Providers who have implemented more advanced patient account financing practices have found a way off this carousel of credit destruction.  The patient gets the benefit of a more manageable payment plan, a positive impact on their credit and the provider gets what they want...on-time payment of all patient responsibility.

About Epic River
Since its inception in 2005, Epic River has been providing financial institutions with software and services for process and revenue improvement. MyLoans, our Patient Lending solution, partners financial institutions and healthcare providers to offer low interest loans to cover patient balances. Practices, surgery centers and hospitals get immediate funding of their patient’s outstanding balances and patients avoid financial harm.