Does Credit History Matter in Self-Pay?

Believe it or not, a report issued by the Consumer Financial Protection Bureau states that up to 26 million people—or 1 in every 10—in the United States don’t have a credit history with one of the three nationwide consumer reporting agencies. Beyond that, roughly 19 million don’t have a credit history extensive enough to create a credit score.

What does this have to do with self-pay and hospitals? More than you might imagine.

Credit History & Consumers

In most facets of our lives, credit history has a big impact on what we’re able to do: buy homes or cars, apply for student loans, or start our own business. A lack of or limited credit history can prevent many people from making big moves in life.

Loan providers look at credit history as a likelihood of getting payments regularly and on time for any loans they provide. As a hospital, you may not be able to credit check your patients before they come in, but socioeconomic status is important when considering the likelihood of getting paid for services rendered. This is particularly noteworthy as patients are shopping their medical care around now more than ever.

This isn’t to say that anyone viewed as a “risk” should be turned away. Quite the opposite: it provides an excellent opportunity up front to talk about the financial responsibility the patient will have, and having an open discussion about payment plans and other financial aid that may be of help to the patient. Determining what a patient can pay regularly can help your hospital close the revenue cycle that much more quickly.

The Report’s Other Findings

The data released also found a couple of other important elements that are noteworthy for hospitals as they admit and treat patients.

  • Just over a third (roughly 10 million) of credit invisible consumers are younger than 25. This may not correlate to their being of a low socioeconomic status, but instead could indicate that they’re young enough to not have built up a significant credit history yet. The other side of that, of course, is that over half of credit invisible consumers are between ages 25-50.
  • The report found a correlation between income and a scored credit record. People living in low-income neighborhoods were more likely to lack credit history. If your hospital is situated near a low-income neighborhood and you have difficulty closing self-pay accounts, this correlation could be a cause. As mentioned above, an open conversation about payment responsibilities can help mitigate this risk.

Credit history may not play the most important role in treating a patient, but it’s certainly an indicator of what you can expect in getting paid. And while you may not credit check your patients, the data provided is important to utilize in your accounts receivable department. Use this knowledge as a reason to talk openly with patients about their responsibilities after treatment, and to figure out the best situation that works for both parties.


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