Seeking Unpaid Bills, Hospitals Adopt High-Interest Payment Plans
A growing number of hospitals are contracting with financial companies that charge high interest rates for patients' unpaid medical bills, a move that most affects the uninsured and underinsured, BusinessWeek reports.
Hospitals typically recover about 10% of treatment costs when they are not paid immediately, even when they hire collection specialists, according to BusinessWeek.
As a result, many hospitals are transferring patient accounts to private companies that will price the debt and charge interest rates as high as 27% on overdue medical bills.
Not-for-profit hospitals are the most likely to use the new collecting system because they typically do not have effective internal collection departments and are likely to treat a large number of uninsured patients.
However, many patients -- the majority of whom are uninsured or underinsured -- are unaware their medical debt is being transferred to companies charging high interest rates.
Companies including General Electric and Citigroup market a repayment plan for patients in the form of a credit card.
BusinessWeek noted a case in which a provider pressured uninsured patients to sign up for GE's CareCard. Another patient was unaware she was signing up for the card.
A GE spokesperson, however, said most of CareCard's six million customers are satisfied (Grow et al., BusinessWeek, 12/3).