KingThomason Group, Inc., a diversified financial and insurance services and products company, reported that it has signed an exclusive financial services contract with the Los Angeles Foundation for Medical Care, according to a joint statement by T.E. “Tim” King III, president and chief executive officer, and Hume A. “Tommy” Thomason, chairman of the board. The contract calls for KingThomason to make available a bank specific, private label, Visa medical accounts receivable credit card to those patients of the Foundation’s 9000 physicians and 80 hospitals who have past due accounts payable.
The Foundation’s medical care provider members currently have approximately $1.4 billion in past due non-insurance-covered accounts receivable. Richard Michel, the Foundation’s President and Chief Executive Officer, commenting on medical care providers’ escalating problem of past due accounts receivable, said, “While 75% of our members past due accounts receivable average less than $1,000 and are less then one year old, heretofore there has been no patient-friendly, non-aggressive means to recover these sums even though a 1999 Neilson Report stated that 94% of all consumers, who owe money on accounts that have been written off by their creditors, would pay their bills if there was a reasonable way of making payments. We believe the KingThomason Credit Card Program is a viable answer and will enable our medical care provider members with a vehicle to recover a significant percentage of their outstanding accounts receivable, and we wholeheartedly endorse it.”
King noted that although, as indicated above, there is information to support the thesis that a very high percentage of past due accounts receivable may be recoverable, the Company, for planning purposes, is using only a 25% recovery percentage.
In summary, the Program works as follows. The approved patient has their accounts receivable amount transferred to the Visa Card. The credit limit on the card is for the amount of the balance owed. As the principal is paid down, these monies are placed on deposit at the issuing credit card bank as collateral for any additional charges that may be made on the card and are subsequently defaulted. Twelve months from issuance, the now-performing credit card debt is “seasoned” and portions of the growing asset base, the amount and timing of the sale being at the discretion of the Company, can be sold in a liquid market at par (face value) with 65% of the proceeds accruing to the client physician or hospital, and 35% to KTG. There is also a monthly interest component on the credit card that generates cash flow for both KTG and physicians/hospital clients, and KTG also earns approximately four percent interest on the collateral reserve monies held at the credit card issuing bank.
Thomason, co-founder of KingThomason, commented, “The past due medical accounts receivable problem is nationwide in scope and has now reached what can only be characterized as crisis proportions. Indeed, in California, for example, only 44% of physicians and physicians groups are currently able to meet state solvency standards. Our Medical Accounts Receivable Credit Card Program is specifically designed to help the medical community address this problem, first in Los Angeles County and California, and eventually nationwide.”
About the KingThomason Group, Inc.
King and Thomason founded what is now KingThomason Group, Inc. in 1998 on the belief that there was a growing and unmet need, as well as financial opportunity, in providing proprietary products and services for overlooked and/or underserved financial and insurance niche markets. The past three years have principally been spent in researching, developing, and market testing a wide range of unique products and services for these markets, assembling a group of 6,500 independent agents and brokers, as well as forging the crucial insurance and reinsurance relationships vital to the insurance side of the Company’s business model. KTG’s insurance operations (excluding the sale of non-proprietary insurance products such as “off-the-shelf” life, accident, health, and automobile insurance where KTG simply acts as a traditional insurance broker) actually function as a hybrid insurance company, i.e. KTG is not involved in either adjudication of claims or the issuance of policies, and assumes no insurance underwriting risk.
About the Los Angeles Foundation for Medical Care
Los Angeles Foundation for Medical Care provides medical industry business support, contract negotiations with insurance companies, and member services support to all of their physician/hospital members and strives to maintain the integrity of the patient-physician relationship.Details