With rising deductibles and coinsurance many options have surfaced to allow patients to cover their portion. This is good news for providers and patients alike. Providers can often accelerate their cash flow and see increased propensity for patients to pay. Patients that can’t afford a large lump sum payment now have an option to break their payments into smaller installments that fit into their monthly cash flow. Also, with patient responsibility now often exceeding annual HSA limits, even patients that can afford a lump sum may opt to finance to take advantage of the tax benefit by stretching their payment over multiple years. Everyone wins, right? Yes and no.
All patient account financing programs are not created equally. The options that are currently available are provider sponsored payment plans, medical credit cards and external medical loan programs. In evaluating these options, providers and patients need to educate themselves on the intricate details. In some cases, programs may appear attractive to providers but can be very detrimental to patients. Furthermore, there are programs that require such a high return to the plan sponsors that everyone loses. Ballooning interest rates, heavy fees to providers and patients and damage to patient’s credit score are all potential outcomes of the wrong program.
Most providers offer some form of no interest plans for as little as 90 days or as many as 36 months. These do not accelerate cash flow for the provider nor do they remove the collection burden. Although friendly to the patient, terms are generally limited such that large or compounding bills can’t necessarily be accommodated. Medical credit cards require that patients qualify which excludes 60%-75% of patients on average. Furthermore, there can be predatory practices associated with some cards. For example, there are cards that offer 6 months no interest where minimum payments don’t cover the balance. At the conclusion of the 6 months introductory period, the interest rate balloons to nearly 30% retroactively. Medical loan programs are a nice alternative. In some cases, programs like MyLoans allow all patients to qualify and pay a very competitive interest rate that they would not necessarily be able to access on their own. MyLoans costs nothing for the provider and offers simple interest loans to patients which result in much more transparency and much less out of pocket over the life of the loan.
The standard medical credit card option will cost a patient over $5,000 more than a medical loan program on a $4,000 patient bill. It is imperative you read the fine print when evaluating various financing options to offer your patients. Remember to extend “do no harm” to your patients’ financial health.
By providing patients with fast access to medical loans at a fair and unchanging interest rate, the MyLoans™ software by Epic River enables financial institutions to ease the financial stress of health care through collaboration with medical providers. Not only can medical providers offer patient financing for medical care needs, but doctors and hospitals alike can finally get immediate funding of their patient’s outstanding balances. Additionally, financial institutions gain new customers and interest income with little administrative overhead in exchange for servicing the loan. For more information, visit www.myloans.co.
About Epic River, LLC
Since its inception in 2005, Epic River has been providing high quality software services aimed at solving process-intensive problems. With a focus on high quality and rapid delivery, Epic River’s methodology accelerates the process of innovation while keeping a firm grasp on the business case behind the application, enabling our partners to grow their market leadership. The company’s unique approach to the agile methodology and user experience ensures both parties work closely together every step of the way. Whether you’re looking to expand into new technologies or markets, need a custom internal tool, assistance with architecture, or simply need someone you can trust to make technology decisions, Epic River is at your service. For more information, visit www.epicriver.com.