TransUnion Healthcare: Patient Payment Responsibility Increased 22 Percent in 2012; Available Consumer Credit to Help Cover Costs Remained Flat

CHICAGO, IL--(Marketwired - Jun 11, 2013) - A new TransUnion Healthcare report found that average patient payment responsibility -- out-of-pocket costs -- on key medical procedures has grown nearly 22% in the last year, increasing from $1,678 in Q4 2011 to $2,042 in Q4 2012. In that same timeframe, the average consumer's total revolving credit line on products such as bank-issued credit cards, store credit cards and home equity loans has remained essentially flat, dropping from $34,430 to $34,301.

TransUnion Healthcare reviewed anonymous data estimates from 200 hospitals across the nation focusing on patient payment responsibilities for key, commonly administered procedures, including major joint replacement, cesarean section and natural birth deliveries. That information was in turn compared with financial data gathered from TransUnion's proprietary Industry Insights Report.

"Most people understand that healthcare costs have been increasing during the last decade, but TransUnion wanted to specifically take a look at the impact of those costs on the consumer wallet," said Milton Silva-Craig, President of TransUnion Healthcare. "Hospitals are discovering that data, analytics technology and improved infrastructure are needed to ensure they understand the payment behavior of patients, through a consumer lens, as they strive to better manage their reimbursement processes."

A ratio comparing available revolving credit to the aforementioned healthcare costs highlights how much more of the consumer wallet is dedicated to making healthcare payments. At the end of 2011, the ratio of total revolving credit line to healthcare costs was 20.5 to 1. In other words, for every $100 in healthcare costs, consumers had $2,050 in revolving credit to make those payments. At the conclusion of 2012, this ratio dropped to 16.8 to 1, or $1,680 in available credit for every $100 in healthcare costs. "This is especially important to review because healthcare costs are on a trajectory to compete more materially with consumers' monthly bills and other credit obligations," said Silva-Craig.

While average revolving credit lines have remained constant, it should be noted that average revolving balances for consumers has actually dropped from $13,079 in Q4 2011 to $12,373 in Q4 2012. These balances also dropped for subprime consumers, the segment of the population with the riskiest credit, moving from $9,992 to $8,747 between the conclusions of 2011 and 2012. "In the short term, it appears consumers on average have been able to successfully manage their increased out-of-pocket medical expenses with their existing credit facilities," continued Silva-Craig. "But as those costs continue to rise, there is a concern that consumers -- particularly those in the nonprime credit tiers, already strapped for cash -- may find themselves in a tight position financially, as healthcare costs compete for a larger share of their disposable income."

TransUnion's analysis found that certain segments of the patient population are facing more difficult challenges than others. Consumers in the prime plus credit category, which includes the most accounts of any credit segment, have actually experienced an increase in their available revolving credit from $21,717 to $22,587 between Q4 2011 and Q4 2012. 

In contrast, consumers falling in the subprime category have seen their available revolving credit decline from an already low $1,414 to $1,406 between Q4 2011 and Q4 2012.*

"Uncompensated care is one of the biggest issues hospitals face in this new era of healthcare," said Silva-Craig. "With more and more people struggling to make payments, healthcare organizations must ensure they are doing all they can to engage their patients in an open and transparent manner in determining the best method in which to make payment or assist them in qualifying for some type of benefit."

TransUnion Healthcare Report - Other Key Findings

• Co-payments and deductibles have also increased at high rates. The average deductible a patient pays has jumped more than 154% between Q4 2011 ($405) and Q4 2012 ($1,032). Average co-pays have increased from $65 in Q4 2011 to $117 in Q4 2012.
• Costs for both cesarean section and natural births have increased by more than 50% between the conclusions of 2011 and 2012. 
  • Cesarean section births increased 51% between Q4 2011 ($1,148) and Q4 2012 ($1,729). Natural births rose 60% in that same timeframe from $890 to $1,424.
• The smallest increase in patient costs were found in major joint replacements. Average patient responsibility increased 6% from $2,435 in Q4 2011 to $2,583 in Q4 2012.

* Prime plus is categorized as consumers with a VantageScore® credit score between 801 and 900 on a scale of 501-990. Subprime consumers have a VantageScore® credit score lower than 640.

TransUnion Healthcare
TransUnion Healthcare, a wholly owned subsidiary of credit and information management company TransUnion, empowers providers with Intelligence in an Instant^® by providing data and analytics at the point of need. TransUnion offers a series of data solutions designed to provide greater ease of use, accuracy and transparency in the revenue cycle process thereby assisting providers in lowering their uncompensated care. www.transunionhealthcare.com