Why Hospitals Want Your Credit Report

Sarah Rubenstein writes in the Wall Street Journal:

In a development that consumer groups say raises privacy issues, a growing number of hospitals are mining patients’ personal financial information to figure out how likely they are to pay their bills.

Some hospitals are peering into patients’ credit reports, which contain information on people’s lines of credit, debts and payment histories. Other hospitals are contracting with outside services that predict a patient’s income and whether he or she is likely to walk away from a medical bill. Hospitals often use these services when patients are uninsured or have big out-of-pocket costs despite having health insurance.

Hospitals say the practice helps them identify which patients to pursue actively for payment because they can afford to pay. They say it also allows them to figure out more quickly which patients are eligible for charity care or assistance programs.


SearchAmerica Inc. is a company that mines credit bureaus for data on behalf of its hospital clients, which it says have doubled in number to 900 since 2005. As patients register for treatment, the company advises hospitals on whether they are likely to qualify for financial assistance. SearchAmerica also generates a health-care credit score, which factors in a patient’s history of paying hospital bills. After the patient receives care, the company factors in the size of the bill and tells the hospital how likely it is that the patient will pay.

Tenet, Fair Isaac Corp., developer of the widely used FICO score, and a venture-capital firm have each contributed $10 million to a start-up called Healthcare Analytics Inc. that is assembling bill-collection data from hospitals to develop methods for predicting patients’ payment habits. The firm is analyzing the impact of health-care-specific factors such as insurance-plan design.

The Health Insurance Portability and Accountability Act, or Hipaa, a federal law that has patient-privacy provisions, doesn’t bar hospitals from providing patient payment histories to consumer reporting agencies. SearchAmerica says it is required by its contracts with the hospitals to keep the information private. The company says it does not receive any medical information from the hospitals.


Full story – Wall Street Journal


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