A new kind of FICO score

DALLAS -- Mortgage lenders aren't the only ones showing more interest in your credit score these days -- the health industry is creating its own score to judge your ability to pay.

The new medFICO score, being designed with the help of credit industry giant Fair Isaac Corp., could debut as early as this summer in some hospitals.

Healthcare Analytics, a Waltham, Mass., health technology firm, is developing the score. It is backed by funding from Fair Isaac, of Minneapolis; Dallas-based Tenet Healthcare Corp.; and venture capital firm North Bridge Venture Partners, also based in Wal-tham. Each kicked in $10 million for the project.

Wealth-based care?

The score is already raising questions from consumer advocacy groups that fear it will be checked before patients are treated.

People with low medical credit scores could receive lower-quality care than those with a healthy medFICO, they argue.

"How much assurance do I have that they're not going to look at this medFICO first, before they decide whether to treat or not?" asked Linda Foley of the Identity Theft Resource Center in San Diego.

That will not happen, says Stephen Farber, chairman and chief executive of Healthcare Analytics. Hospitals will check the score, which will be based on the patient's medical bill payment history, only after the patient is discharged, he said.

"We only come into play once the patient has been treated and discharged, and the bill already exists," said Farber, who has visited hospital executives nationwide over the last six months to sell the concept. "We just help figure out what sort of relief a hospital should grant the patient."

Only billing data

Hospitals and other caregivers already can tap into regular credit scores -- even without the patient's permission -- but those are not necessarily a good indication of whether a patient will pay a medical bill, Farber says. Such credit scores are based on voluntary purchases, such as a car. Health care debt is largely involuntary.

Under the Fair Credit Reporting Act, hospitals and doctors are allowed to report health care debts to credit reporting agencies, but they cannot indicate what they were for. "They have to do it in a way that there will be no way a person looking at the information would be able to guess what they were treated for," said Frank Dorman, spokesman for the U.S. Federal Trade Commission.

The proposed medFICO score would be legal as long as it only includes billing data. And unlike a standard report, which only lists late medical bills, the medFICO score would reflect a history of on-time payments.

Uncollectible write-offs

To develop its scoring system, Healthcare Analytics is collecting patient billing data from hospital systems with a combined $100 billion in annual net revenue.

Tenet executives say the scoring system could help them decide whether a given patient can pay his or her bill or if they should just write it off as uncollectible, or a "bad debt" in industry lingo.

Without a way to gauge the likelihood that patients will pay their bills, hospitals cannot comfortably invest in new projects or accurately balance expenses against revenue.

Tenet, the nation's third largest hospital system, with 63 hospitals and medical centers, had $433 million in bad debt through this year's third quarter. Seventy-five percent of that bad debt was from uninsured patients and 25 percent from those with deductibles they couldn't, or wouldn't, pay, according to Steve Mooney, Tenet's senior vice president of patient financial services. Foley asked. "If he had a low score, would he have gotten the same type of care that he got last night?"

Mooney, of Tenet Healthcare, says the hospital business has changed over the past 30 years to take on characteristics of the retail industry. With patients expected to pay a larger share and do more comparison shopping, they soon will be able to purchase health care much like an automobile, he said.

Pamela Dixon, executive director of the World Privacy Forum, a consumer advocacy group, isn't impressed. "I don't like it; I don't like it at all. These are people's lives we're talking about. This isn't some car."