What Do You Know about Your Medical Credit Score?
If you've recently filed bankruptcy, applied for a loan, or read a financial publication, you're probably aware that your credit score plays a major role in many of the big-and small-financial decisions you make.
Your credit rating can determine the terms of your credit card; it can affect your ability to borrow money for a house or car; and it can be the first indicator that someone has stolen your identity. In short, credit reports are a huge part of modern life in America.
It may not come as a surprise, then, that the medical industry could be jumping on the bandwagon.
According to the Dallas Morning News, the Fair Isaac Corporation, Tenet Healthcare Corporation, and North Bridge Venture Partners have each contributed $10 million toward a new project: a means of developing a medical credit score.
Healthcare Analytics is reportedly the company in charge of developing the formula for calculating the score. Based on Fair Isaac's FICO credit score, the new figures will be known as medFICO scores. Even though they have yet to be put into practice, they're already coming under criticism from consumer activists.
Some wonder, for example, if access to a patient's payment capability information will influence doctors' decisions to perform certain tasks. Others worry that reporting medical bills will violate patients' right to confidentiality.
But proponents of medFICO scores reportedly insist that hospitals will not even see patients' payment histories or credit information until after they have been discharged. The purpose of the scores, according to these proponents, is to allow hospitals to better balance their financial books.
Some people remain skeptical, though.
Tenet Healthcare Corp., which consists of 63 hospitals, reported $433 million in bad debt-that is, debt that patients are unlikely to repay-as of the third quarter of this year. Of that debt, a reported 75% came from people with no medical insurance.
Sources suggest that hospitals would use medFICO scores to estimate more quickly how much bad debt they had, which will prevent them from having to guess who will and won't be able to pay.
But consumer advocates worry that Tenet's $10 million investment in the medFICO project may be motivated by a goal of minimizing that debt by using medFICO scores to determine how to treat patients.
Other concerns come from the fact that medFICO scores are apparently set to follow the same format as traditional FICO scores-a format that has led to documented inaccuracies for consumers. Some critics have suggested that Healthcare Analytics should look for a model that would prevent more mistakes.
Analysis from the Consumer Federation of America found that 29% of FICO scores contained mistakes, making some worry that similar mistakes in a medFICO score could mean problems for sick patients.
Healthcare in the United States remains a major source of concern and debate, and unexpected medical expenses remain a leading cause of bankruptcy. At this point, though, the impact of the medFICO score on the medical industry can only be guessed.