"The beauty of the program is you have the money in the bank. We get funded the full amount minus the fees, and the account becomes a zero balance account in our AR. Depending on what you are getting on your investments, you can make a good percent on your cash in the bank. Also, you don't have statement costs, and you don't need as many collectors to do the follow-up work," Skinner says.
Although the health system does have to repay any accounts where the patient becomes delinquent, this occurs only rarely and the financial risk is low, he says.
"We do have a very low recourse rate. On the accounts that recourse, we have to pay back the outstanding balance of the loan, but we get back the unearned portion of interest."
Skinners says another advantage is that patients are more likely to pay a bill that comes from a bank rather than a hospital. "Any literature you read says hospitals are low on the scale of where people place value for paying a bill. If the statement is coming from a bank, they are more likely to take it seriously."
The loan program is also a good way to identify patients who might qualify for charity care, Skinner says. "If someone can't pay $50 per month toward a bill, you need to dig into that and identify if they are eligible for charity care. That saves time and money."
Skinner reports that through the loan program St. Vincent is recovering about 90% of the balances while simultaneously improving its patient satisfaction.
"By the time you factor in the value of the interest on that money and the additional staff time you would need to manage those accounts, it is win/win. … There are also positives that are hard to measure. The biggest value proposition here is it is fantastic customer service."