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Letter to the editor

As medical costs grow, creditors get in the game

The days of paying off a hospital bill with an interest-free, $25-a-month installment plan may be coming to an end.

By Kris Hundley, Times Staff Writer
Published February 24, 2008

The days of paying off a hospital bill with an interest-free, $25- a-month installment plan may be coming to an end.

But hospitals in the Tampa Bay area are approaching any bill-paying changes cautiously, for fear of ending up with the kind of public relations disaster that hit Hot Spring County Medical Center in Arkansas in early December.

To increase its cash flow, the hospital sold patient debt to a private finance company, CompleteCare, which tacked on interest and billed the patient. What resulted was a poster-child for Michael Moore's Sicko: an uninsured truck-stop waiter, who could afford $100 a month to the hospital, was stuck with a bill more than four times that size from CompleteCare.

The finance company and the hospital scrambled to save face after the situation was exposed in a Business Week article. A hospital executive, who initially said patients would pay faster if they were charged interest, quickly relented and said that going forward, CompleteCare would charge no interest to patients. The change means the hospital will get less cash up-front from sale of its debt.

Hospital executives in the Tampa Bay area could only shake their heads at the way the waiters' debt was handled.

"Anybody in health care could see that patient would have qualified for charity care," said Patty Gentile, who has been working with patient accounts at HCA's back office operations in Palm Harbor for 18 years. "Her debt never should have gone to that credit card company."

As the number of uninsured has grown, local hospitals have become adept at screening these patients for any possible source of reimbursement. First are government programs like Medicare, Medicaid and county funds for the indigent. People like the waiter who can't qualify for welfare, but fall within 200 percent of the federal poverty guideline $20,800 for a single person and $42,400 for a family of four, get their bill written off as charity care.

The nine-hospital BayCare Health System, which extends charity care to patients with incomes up to 250 percent above the poverty level, wrote off $48-million in charity care in 2007.

Keeping debt in-house

It is uninsured patients whose income falls above charity guidelines, so-called "self-pay patients," that have been the bane of hospital accounting departments. Local hospitals offer these patients a discount off charges, ranging from 25 to 65 percent; Tampa General Hospital gives a 70 percent break to patients who pay within 30 days.

Though the discount is usually enough to make the bill comparable to what an insurer would pay for a procedure, it's more than many people have on hand. So hospitals in the Tampa Bay area try to hammer out individual payment plans with terms that can seem absurdly low.

"We have people here paying $5 a month, religiously, for 10 years," said Bob Thornton, chief financial officer at St. Petersburg's Bayfront Medical Center. "The bill may never be paid off, but as long as they continue to pay, it remains a debt that's handled between the hospital and the patient."

A help for hospitals

A growing number of financial companies, including giants like GE and Wachovia, figure hospitals can't continue to rely on Depression-era payment plans in the 21st century. Not only are more uninsured patients leaving hospitals with big debts, but increasingly, insured patients have such high out-of-pocket costs that they go home owing money.

Steve Posa, vice president of HELP Financial of Plymouth Mich., has financed about $300-million in medical bills from 100 hospitals nationwide, including Florida Hospital Zephyrhills.

"The hospitals we're in say they can't afford to be the banker and the health-care provider at the same time any more," he said. "We try to come up with a fair, viable option."

At Zephyrhills and two other Florida Adventis hospitals, HELP buys the debt at a discount, then charges patients a 9.5 percent interest rate. JoAnn Tinberg, director of patient financial services at Zephyrhills, said HELP is an option most often used by insured patients with out-of-pocket balances. The average loan is $4,400 and paid off within three years, she said.

"A lot of patients say no to HELP because they don't want to pay interest," said Tinberg, who said the hospital offers long-term, zero-interest loans. "But from a business point of view, it does get my AR (accounts receivables) down and zero out my balances."

A changing business

Gentile, who handles patient billing for 22 HCA hospitals in Florida, said she's turned down plenty of vendors with patient financing plans.

"The way debt is handled after it leaves our facility is still a reflection of HCA," she said. "So we've made a conscious decision not to turn our receivables over to these companies."

Tommy Inzina, chief financial officer of BayCare, said there's no question health care is evolving from a wholesale business, where the payor is an insurance company, to a retail business, with individuals footing a higher portion of the bill.

"We see more financial institutions trying to determine if this is a profitable business for them," he said. "But we haven't found a program that we think fits within our value system.

"We want to collect from patients who have the ability to pay. But we want to make sure they are treated with dignity and respect."

Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

How this system works

The issue: Hospitals are holding more patient debt as the number of uninsured grows and even insured patients have higher out-of-pocket expenses.

The controversy: Though most hospitals in the Tampa Bay area still carry patient debt interest-free, more hospitals are selling the debt to finance companies.

The upshot: Hospitals get cash up-front, but patients get a creditor who can charge interest.

[Last modified February 23, 2008, 21:28:45]