How Credit Unions & Health Care Providers Can Join Forces to Address Medical Debt

Within America’s health care system lurks a growing threat: Medical debt. Nearly 42% of Americans have medical debt, according to a 2022 KFF Health Care Debt Survey, with the average household owing more than $13,000, the U.S. Census Bureau reported. Millions of Americans struggle under its crushing weight, often facing impossible choices between essential treatment and financial stability.

Medical bills trap families in financial hardship, hindering their ability to afford basic necessities and jeopardizing their health by discouraging preventative care and treatments. This burden affects the most vulnerable such as low-income families, minorities and those with chronic illnesses.

How can credit unions help to counter this consumer crisis? Partnering with local health care providers creates a surprisingly simple solution to disrupt the cycle of inescapable debt. By forging credit union-health care partnerships, patients can access universal and accessible medical loans at the lowest cost possible, while credit unions strengthen the communities they serve.

Forming Collaborative Partnerships

For patients grappling with unaffordable medical bills, traditional lending options often prove inadequate or inaccessible. Predatory lenders and credit cards exploit their vulnerability, offering high-interest credit that exacerbates financial woes. Additionally, rigid credit score requirements exclude those most in need, leaving patients in a desperate bind juggling their health and financial security.

This financial challenge also burdens health care providers. When patients lack affordable payment options and their bills remain unpaid, this strains providers’ financial resources, affecting the quality of care they provide.

Credit unions, however, offer a glimmer of hope. Rooted in the principle of “people helping people,” they prioritize community service and understand members’ unique challenges. Credit unions’ innovative approaches, flexible lending practices and financial education focus make them ideal partners in alleviating overwhelming health care debt by creating greater affordability.

Collaboration between credit unions and health care providers presents a powerful opportunity to address non-payment of patient bills. Health care providers gain access to a reliable funding source, improving patient payment rates and overall health outcomes. Patients gain a feasible option for settling their medical debts within their financial means. Meanwhile, credit unions expand their membership reach, strengthen community ties and fulfill their financial inclusivity mission.

Benefits Beyond the Bottom Line

The advantages of these partnerships extend far beyond mere financial gain. By working together to transform the medical debt repayment model, credit unions and health care providers can impact various aspects of individuals’ lives and broader community well-being by:

• Improving patient stability: Access to affordable loans empowers patients to seek necessary health care treatment and ensure payments will accommodate their budget. By offering flexible repayment options and zero interest options, credit unions enable patients to address medical expenses without sacrificing their financial stability or accruing excessive debt. Removing financial barriers to these essential services leads to better health outcomes and reduced treatment costs in the long term.
• Boosting local economies: Health care providers are commonly among the largest employers and most critical businesses to maintain a thriving community. Lessening medical debt collections not only ensures the financial viability of these organizations but also contributes to the overall resilience of the community.
• Cultivating greater trust: Health care providers and credit unions share the common goal of working to uplift community members. Partnering to enhance the affordability of patient care strengthens this community bond and cultivates greater trust. By demonstrating genuine care and support, both institutions foster stronger relationships with patients and the community.

Building the Bridge

While this approach offers promising value, partnerships between credit unions and health care providers pose challenges that demand careful planning. Navigating complex health care regulations, ensuring responsible lending practices and protecting patient data are critical considerations.

However, these hurdles can be overcome with robust technology to foster a seamless user experience and secure data exchange. Steps to building this bridge toward success include:

• Develop pilot programs: When first initiating this approach, it will require trial and error to determine how to carry out the strategy to achieve beneficial results for patients and the community. Credit unions should test the funding strategy with a small-scale pilot program at a clinic or small hospital. This will allow both parties to refine the approach and identify potential areas for improvement.
• Establish clear guidelines: Well-defined guidelines ensure consistency in lending practices across health care providers and credit unions. By standardizing loan terms, patients receive transparent information about their borrowing options, interest rates and repayment schedules. This transparency fosters trust and enables patients to make informed decisions regarding their financial obligations.
• Prioritize financial education: While this partnership is meant to relieve financial burdens for patients, they should also receive resources to help prepare them for successful loan repayment. Credit unions and health care providers can equip patients with financial literacy tools to help them understand the terms of their medical loans and manage their debt.
• Leverage technology: By working with fintech partners, credit unions can ensure the smooth adoption of lending technologies to streamline their collaboration with local health care organizations. Leveraging digital platforms will enable the credit union to integrate with health care data systems and simplify the loan application process for patients.
• Promote collaboration: Open communication will allow the partnership to flourish and have a meaningful impact on patients’ well-being. Credit unions should work to establish a strong rapport with their health care partners to ensure both parties can gauge the program’s success, monitor loan outcomes and implement adjustments to better meet patient needs.

A Call to Action

The escalating burden of medical debt threatens the welfare of countless individuals, families and communities. By joining forces, credit unions and health care providers have the power to reverse this trend. A partnership model holds promise not only to uplift individual patients, but also to ensure local communities do not lose critical health care providers. Together, credit unions and health care providers can combat the challenges of health care affordability with compassion, collaboration and a shared vision of a healthier, more financially secure future for our communities.

Jeff Grobaski is Founder and CEO for Epic River, a Fort Collins, Colo.-based payments software provider serving health care providers and financial institutions.