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Evaluate vendor options

Patient Access Weekly Advisor, February 6, 2008

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Instead of acting as a bank and loan servicer, most hospitals are turning to experts in automated patient financing. With the right partner, you'll improve cash flow and reduce administrative costs related to billing and collections. You will also improve patient relations by being able to provide loans to patients that you'd otherwise send to collections-provided, of course, that the vendor uses a patient-centered approach and adheres to compassionate collection practices.

Once you've made the decision to use the services of a vendor, evaluate the various options that are available from different providers to determine which combination of offerings is best for your organization. These options include the following:

• Type of programs-Evaluate the types of plans you want to offer, including zero-interest financing, easy qualification, lines of credit sufficient to meet the patient's obligation to the hospital, and extended payment plans with low monthly payments.
• Application- or nonapplication-based loans-Do you want to spend your staff's time and energy obtaining applications, or would you rather implement a nonapplication program?
• Terms of use-Terms of use can be restrictive (i.e., patients can use the loan program only for hospital charges) or flexible (i.e., patients can place charges from both the hospital and hospital-owned physician practices on the line of credit).
• Payment options and rates/fees-Know what the vendor's policies are relating to down payments, minimum monthly payments, interest rate increases due to patient delinquency, overlimit fees, returned payment fees, initiation charges, prepayment penalties, and other charges. Also, in the pursuit of full disclosure, share this information with patients early in the process, even before they've received care.
• Banking partner-Evaluate the reputation of the vendor's banking partner, as well as its flexibility of contractual terms. It is preferable for the vendor to have more than one banking partner, so you do not run the risk of the bank exiting the market.
• Servicer of account-Know who is interfacing with your patients and make sure that they are experienced in healthcare account servicing. Companies that service your patient accounts can range from generic credit card servicers and collection agencies to industry-rated servicers that handle only healthcare accounts.
• Recourse rates-Spend time understanding the vendor's ability to manage and report on recourse, as well as understand risk. Make sure you know how recourse is calculated and are aware of the terms and conditions.
• Tools to help hospitals promote the program-Customize collateral materials to your hospital and disseminate this information wherever you can, including in registration. Work with the vendor to understand what is available to you before you make a decision.
• Service fee-Service fees and baselines also vary. Some vendors charge a fixed rate, whereas others base the fee on the interest the hospital charges to the patient and the type of program the hospital chooses.

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