"With the previous vendor… we had a 49.2% average collection rate. With the new vendor, the collection rate is 88%, which is great. Another benefit for the hospital is cash flow. The company fronts us the money so they are taking the risk. It gives us money in advance; it's good cash flow for us. So far, they have paid us $4.7 million up front," Nguyen says, noting that the vendor's maximum recourse is 18%.
The new program has also improved patient satisfaction. "Now people feel like we are trying to work with them. They have more time to pay, and we are willing to freeze payments and rework their payments to make it more manageable. We are very flexible with patients, and the feedback we get is that they like it," Nguyen says.
Philip Skinner, system director revenue cycle at St. Vincent Health, a member of Ascension Health, which serves 47 counties in central and southern Indiana, tells a similar story. Two years ago, St. Vincent moved its financing program to a new vendor to provide zero-interest loans and a more generous timeframe for repayment.
"We had a change of heart," Skinner says. "We are a Catholic organization. Our mission group looked at what we were doing and the options we were offering. For customer relations reasons, what we wanted to do was to offer patients a program where we would absorb the interest. … We have designed the program for all credit scores, and patients can sign up for terms up to 72 months."
"Obviously, there is a cost to St. Vincent, but it is a low interest rate, and it is prorated for us based on the expected term of the agreement," he adds.
Skinner says St. Vincent has reaped multiple rewards since starting the new program, not the least of which is that the vendor pays the balance in full to the health system up front. For patients with strong credit scores, the payment is made immediately; for patients with a credit score below 600, the balance is paid as soon as the patient makes the first payment, thereby demonstrating a propensity to pay.