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Recession hitting health system harder this time around

Patients are having trouble paying medical bills, a new study finds.

By Victoria Stagg Elliott — Posted May 12, 2010

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Patients are facing more financial problems in the current recession than they did during the 2001 recession, according to a report by TransUnion, a consumer credit-rating agency.

The survey of 46 administrators of hospitals and health systems operating in 50 states, released April 13 by TransUnion, found that about 96% noted a rise in patients who were uninsured or underinsured. This is the most important issue facing their organization, 41% of respondents said.

Other key issues included dealing with higher co-pays and deductibles, more regulatory scrutiny and complex financial assistance programs.

"Notwithstanding the recent passage of the health care reform bill, with unemployment rates still at near-historic levels, it is apparent that health care organizations will continue to face challenges with the increasing uninsured patient population," said Milton Silva-Craig, executive vice president of TransUnion's health care business unit.

In addition, the company's Credit Risk Index noted a decrease in the ability of consumers to pay off debts within 90 days. This factor is considered more important to health care organizations than in the past because patients are responsible for an ever-greater portion of the cost of care. In the TransUnion survey, 83% said they noticed more self-pay patients during the last 12 months.

"The responsibility is being placed on patients, but as that becomes more and more common, a lot are unaware or unprepared for what their outlay may be. The burden falls on the hospitals," said Matt Fenwick, American Hospital Assn. spokesperson.

TransUnion's Credit Risk Index increased 4.3%, from 109.77 to 114.53, in the 2001 recession. But in the current recession, it went up 9.5%, from 118.38 to 129.67. This means consumers are having a much harder time paying their bills on time.

"Though the Credit Risk Index is showing signs of finally beginning to level off, it is important to understand that consumers are ... [more at risk] today than they were at the beginning of the 2001 recession, a condition that is filtering down into many different industries, including health care," said Chet Wiermanski, TransUnion's global chief scientist.

Health care is believed to lag behind other economic indicators because large numbers of people must rejoin the work force and become insured again for the industry to expand. Hiring also tends to be one of the last numbers to start going up after a recession ends. The unemployment rate was 9.7% as of April 2.

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