Hospitals offering discounts to patients who bypass insurance

Caroline Lancaster, a senior citizen from Alameda, California, had the typical reaction after a trip to the local medical center.

"When I get those hospital bills, my heart just goes 'woo!' " she said, clutching her chest.

Fees for drugs, doctor visits, treatments and tests can be confusing-- not to mention staggering. Hospital bills often sit at the bottom of the pile as patients wait to hear from their insurance company and delay payment for as long as possible.

Now, to get their money faster, more hospitals are offering deep discounts and other incentives. Patients who pay their bill early, or bypass their insurance company altogether, can actually save money.

At Marin General Hospital just north of San Francisco, patients with insurance who settle up right away can get 25 percent off their bills. Those who don't use insurance could get as much as half off their bill-- if they pay the hospital directly within 30 days.

"For those patients that are in a position to pay their bill promptly, it's good for them because they get the discount, and it's good for the hospital because it saves us money on the back end of the collection side," said Jon Friedenberg, chief business development officer at Marin General Hospital.

Administrators say the process of going after patients with an unpaid balance costs them hundreds of thousands of dollars. After they bill the insurance company, it can take up to six months to get reimbursed, and only then do they bill the patient. According to health experts, bad debt is putting hospitals at risk.

"It's an industry that faces hard times, and most would say, ‘If you can collect something, it's better than taking a chance on collecting nothing,’" said Paul Keckley, executive director with the Deloitte Center for Health Solutions.

Doctors like Alameda internist Dr. David Belk are also giving deals to patients who give them cash up front.

"If somebody comes to me with a $50 bill and says, ‘Doctor, can you see me?' I don't have to bill the insurance company which doesn't give me a major headache," said Belk.

Belk's website,, advises patients to shop around and talk to their doctor to see if they can lower their bill by not using their insurance.

For a lot of people, that may not be possible. But the take away here is that patients need to be active consumers. Because the bill you get might not necessarily be the bill you have to pay.