Credit Risk Management For Hospitals
Faced with issues of mounting debt as a result of the growing popularity of insurance plans with high premiums and shrinking federal reimbursements, hospitals and other care centers must develop new strategies to combat bad debt in order to continue to provide quality patient care.
As a result, many hospitals are now investigating patients’ credit reports to determine how likely a patient is to walk away from a medical bill. With one in five Americans found to be struggling with medical debt in 2013, hospitals need to protect themselves against unnecessary risk.
An article on TheGazette.com exploring the trend found that the University of Iowa Hospitals and Clinics regularly use credit risk assessments to help minimize losses.
University of Iowa officials told the source that looking at patient credit scores “helps them identify which patients need help paying their bills so the hospital can provide counseling about charity care or payment plans,” and that the practice is “becoming increasingly common for hospitals across the country.” Under the Affordable Care Act, non-profit hospitals are now required to determine if a patient qualifies for charitable care.
According to the Gazette, the checks are done without the patient’s permission, and hospital officials disagreed about whether the check is classified as a “soft inquiry,” which would not negatively affect a patient’s score, or a “hard inquiry,” which has the potential to have negative consequence on patient scores. Jonathan Fox, director of ISU’s Financial Counseling Clinic, explained that the check may be characterized differently by different credit bureaus.
With a record number of Americans now seeking care under the Affordable Care Act, hospitals and care facilities are learning the utility of performing a credit risk assessment. Credit risk software that can help hospitals protect themselves from bad debt is currently available, and can be customized to suit a facility’s needs.
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