As the economy continues to falter and job losses mount, Maine’s hospitals are seeing fewer patients with the ability to pay.

Bad debt – money owed and unlikely ever to be collected – increased from $154 million in 2007 to $168 million in 2008, according to the Maine Hospital Association. Many expect bad debt to climb even higher this year.

To head that off, some hospitals are trying to make services more affordable, even forgiving chunks of bills for patients who pay right away.

Mercy Hospital in Portland recently increased the prompt-pay discount it offers to uninsured patients – more than doubling it from 10 percent to 25 percent if the patient pays the rest of the bill on time.

“You’re getting money in the door that you might not otherwise get, and you’re getting it then and there,” said Mercy spokeswoman Diane Atwood. “Really, how could we not afford to do it?”

Prompt-pay discounts are nothing new; Maine hospitals have been offering them for years. But in this poor economy, such discounts have become increasingly important to patients, who struggle to pay their bills, and to hospitals, which struggle to meet their budgets.

Of the six largest hospitals in the state, five said they offer some kind of prompt-pay discount to uninsured patients, insured patients or both. Discounts ranged from about 3 percent to 40 percent. Some hospitals require patients to apply for the discount. Others offer it automatically.

This year, Eastern Maine Medical Center in Bangor offered an automatic 10 percent discount to both insured and uninsured patients who prepay or pay at the time of their visits. In those cases, patient bills are estimated. If the estimate is too low, EMMC allows a 10 percent discount on the remaining amount.

The hospital offers the discount to increase patient satisfaction and cut billing costs.

“It just seemed like the right time to do this, especially given the state of the economy,” said Cindy Olivier, who helps oversee patient account services.

At MaineGeneral Medical Center in Augusta, the state’s third-largest hospital, a spokeswoman declined to say whether the hospital offered prompt-pay discounts. She instead referred to MaineGeneral’s Web site. The site provides some limited information about patient assistance programs but does not specifically mention any discounts for prompt payment.

Franklin Memorial Hospital in Farmington is not one of the largest hospitals in Maine, but it is the only one in Franklin County. It, too, offers discounts to patients who pay on time. Patients with a free Franklin Community Health Network HealthCard get 10 percent off their bills if they pay within 10 days. The hospital will also negotiate discounts – usually up to 20 percent – on a case-by-case basis.

The hospital’s bad debt is up 10 percent this year. Its free care is up 60 percent.

Eric Martinsen, the hospital’s chief financial officer, believes the increases are related to rising unemployment rates. He expects bad debt and the need for discounts and charity care to grow.

The problem is, Franklin Memorial’s charity care is already 80 percent over budget. So how can the hospital afford to give away services or offer discounts?

“We adjust other expenses to be able to fulfill that,” Martinsen said.

One of those adjustments: the closure of the hospital’s day-care program.

Other hospitals say discounting care for prompt payment is actually helping their bottom line.

Mercy increased its discount two months ago and has since received $200,000 from patients. It’s not enough to counter all the bad debt on the hospital’s books, but “that’s a couple hundred thousand dollars you might not see at all, otherwise,” Atwood said.

The hospital sees prompt-pay discounts as a way to help patients but also as a way to help itself. Such discounts give patients the incentive to pay, and pay quickly. Otherwise, Atwood said, those same patients might not pay at all.

But what about those patients who don’t have the cash to pay off their medical bills within the next 10, 30 or 60 days? Hospitals say they offer other programs, including payment plans and free care to low-income families.

Like prompt-payment discounts, some of those programs are automatic; others require an application. Experts advise patients to call hospitals for more information.

“I think making that phone call and seeking help and looking for that counseling is very important,” said Mary Mayhew of the Maine Hospital Association. “I’m not sure patients understand that hospitals are there to help navigate those bills and what kinds of assistance can be provided to them.”

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