Bank loans used to collect unpaid medical bills

Sunday, August 31, 2014 | 3:34 p.m. CDT; updated 3:29 p.m. CDT, Monday, September 29, 2014

ST. LOUIS — A health system with hospitals in Missouri, Illinois, Oklahoma and Wisconsin has started working with a bank to offer interest-free loans to patients with unpaid medical bills.

Since SSM Health Care inked a deal with Commerce Bank five months ago, $6.5 million has been lent to about 4,000 patients, the St. Louis Post-Dispatch reported. Patients get the loans without undergoing credit checks, and Commerce Bank receives a service fee for administering them.

"The need for something like this has always existed," said Paul Sahney, vice president of revenue management for SSM Health Care, noting that out-of-pocket health care costs are rising significantly.

Hospitals have long worked out payment plans with patients in-house. But Sahney said his hospitals aren't positioned to effectively manage monthly payments from patients like banks already do with home and car loans.

Sahney expects the new relationship with Commerce will ultimately drive down the health system's bad debt, which grew from $157 million in 2012 to $204.7 million in 2013.

Mark Huebner, vice president of health care banking for Commerce Bank, said partnering with hospitals "fits in the wheelhouse of Commerce Bank perfectly."

SSM can easily submit the payment information to the bank when a patient expresses interest. From there a patient with a balance of $7,000 or more for hospital services is eligible for a five-year term loan. There is no minimum payment, but the first payment must be $300, Sahney said.

Anyone whose hospital bill is more than $300 is eligible for the loan. No one is denied the interest-free loan even if it appears the person has no ability to pay.

If a patient stops paying or defaults, SSM "would then be the ones to move forward with attempts to collect," said SSM spokesman Steve Van Dinter.

Similar loans are being offered to patients at other hospitals. About a year ago, Chesterfield-based Mercy Health began working with Commerce to offer loans to patients in the St. Louis area, and recently expanded its loan options with Commerce.

Like SSM, Mercy will now switch to interest-free loans for up to a five-year term instead of a just a three-year option, said Robin Sumner, executive director of patient services.

Executives with Oregon-based CarePayment, which offers a plan similar to Commerce's program, say business is booming as more providers, mainly hospitals, look to partner with the finance company.

"We've seen a significant uptick in interest from providers in the last 12 months," said Chief Operating Officer Ann Garnier. "We're seeing double-digit growth."

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