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Health November 20, 2008, 5:00PM EST

Hospitals X-Ray Patient Credit Scores

(page 2 of 2)

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Leonard wouldn't tap her modest 401(k) to get further eye treatment Ben Van Hook

Evans: "I felt violated that they had looked at my credit without telling me" Stefan Hester

Yet Evelyn Leonard, a 49-year-old cafeteria worker, says that Halifax Health Medical Center of Daytona Beach refused to schedule her for radiation treatment earlier this year after staff members questioned her about possibly tapping her 401(k) account to help pay the bill.

Leonard's annual income of about $18,000 qualifies her for charity treatment at Halifax, and the hospital gave her a 50% discount for a procedure last year related to a benign tumor behind her left eye. She estimates she still owes several thousand dollars to Halifax.

When her doctor at a free clinic earlier this year recommended a course of radiation to reduce the size of the tumor, Leonard tried to make a new appointment at Halifax. But this time, the hospital denied her any discount, she says.

In March, two financial counselors at the hospital asked Leonard why she wouldn't withdraw money from her 401(k) to pay her medical bills, she says. Leonard said she wanted to hold onto her modest $3,000 balance in case her health made it impossible for her to work. "I won't say they never helped me," Leonard says. "But I wish they would finish what they started."

Arvin Lewis, Halifax's vice-president for patient business and financial services, won't comment on Leonard's case, citing patient confidentiality. "Part of our mission is to provide care to people who fall through the cracks, but we cannot incur a cost that taxpayers and the community cannot bear," he says.

The publicly funded nonprofit reported $41 million in uncompensated care last year for uninsured patients. The hospital is further automating its review of patient credit reports and other financial data to ensure that charity care is granted wisely, Lewis says.

In a different twist, Jacqueline Evans was rejected for subsidized treatment because of an $1,800 line of credit she had available on her Visa (V) card. In January 2007, Evans, 27, a part-time hair salon employee, received an X-ray of her chronically painful back at Union County Hospital in Anna, Ill. The hospital sent her an invoice for $371. She applied for a waiver of the bill based on her annual income of only $6,500, which fell below the federal poverty line and ought to have qualified her for free care under the hospital's rules.

But the hospital, part of Community Health Systems (CYH), one of the nation's largest for-profit chains, refused. Instead, Union instituted bill-collection proceedings and tacked on $400 in attorney fees, bringing Evans' bill to $771, court records show.

In its October 2007 letter rejecting Evans' application for charity care, the hospital pointed to her $1,800 "credit-card availability." She also had a $1,200 balance she was trying to pay off.

"I felt violated that they had looked at my credit without telling me," Evans says.

FINANCIAL-ANALYSIS SCANS

Evans hired a legal aid lawyer to defend her against the collection action. In December the hospital dropped the case without explanation, says the attorney, Mary Kramer of Land of Lincoln Legal Assistance Foundation.

Rosemary Plorin, a spokeswoman for Community Health Systems, which is headquartered in Franklin, Tenn., says some of the 118 hospitals in the chain use financial-analysis software provided by Passport Health Communications. But she won't say whether Union is one of them.

Jeff Drake, marketing chief for Passport, which is also in Franklin, says his company's software allows hospitals to calculate patient "medical credit scores" based on credit-card data, among other information. Neither Community nor Passport would comment on Evans' case.

The surest sign that wallet biopsies are catching on is the proliferation of analysis companies offering their services to the country's 5,000 hospitals. SearchAmerica says that it has 1,000 hospital clients. The three major credit bureaus—TransUnion, Equifax (EFX), and Experian (EXPGY)—are marketing their own customized software for medical providers. And this summer, private equity giant Bain Capital invested $50 million in MedeFinance in Emeryville, Calif.

Lawmakers in one state, Minnesota, have tried to restrict medical credit scoring. But Republican Governor Tim Pawlenty vetoed a bill in May that would have required hospitals to provide care before seeking a patient's financial data.

Lori Swanson, Minnesota's Democratic attorney general, had proposed the legislation. "It's easy to imagine a slippery slope," she says, "where [credit] scores get in the way of appropriate treatment."

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Credit Crunch for Hospitals

The financial crisis has forced hospitals such as one associated with Oregon Health & Science University to postpone or rethink expansion plans as debt payments rise and the ability to issue new bonds remains uncertain. The Oregonian reports that academic medical centers often rely on hospital expansions to offset losses in research and education funding.

For more coverage by The Oregonian, go to http://bx.businessweek.com/credit-crunch

Berner is a correspondent for BusinessWeek in Chicago. Terhune is a senior writer for BusinessWeek based in Florida.

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