With more people unable to pay medical bills, local hospitals and health care facilities are increasing efforts to reduce bad debt.

Whether it's turning to collection agencies, new computer software or starting to collect money up-front, health care treatment facilities continue to look for ways to reduce the growing amount of unpaid bills -- a problem some officials say is the No. 1 issue facing hospitals today.

"We are seeing higher charity write-offs from uninsured and under-insured (based on income) that cannot afford the medical bill," says Gary Perrizo, director of patient accounting for Vanderbilt University Medical Center.

According to a new study from the Commonwealth Fund, 41 percent of working-age Americans, or 72 million people, have reported medical bill problems or trouble paying off medical bills. That's up from 34 percent in 2005.

A new national study by Nashville-based nTelagent Inc. found bad debt can't solely be blamed on the uninsured. Sixty-five percent of all bad debt is a result of insured patients, the study found, with an average bill ranging from $700 to $1000.

Perrizo says insurance companies are increasing their scrutiny of claims, which stalls payment and increases health care costs.

Deductibles and co-pays have risen also, he says, so patients are responsible for a larger share of the pie.

Vanderbilt is encouraging more upfront payments and looking at computer tools that would help cut down on collection expenses, Perrizo says.

Earl Winter, CEO of nTelagent, says his company has developed software that is linked to more than 4,000 social programs that help determine what services patients are eligible for upfront.

He says in many instances patient bills that go through the costly collection process can be avoided because the patients are eligible for charity or discount programs.

nTelagent software helps providers recoup more and save on collections by identifying eligible programs.

The software also offers a script for employees to follow that aids them in taking payments on the front end. It helps medical workers who often aren't trained in asking for money.

"Over time, the patient portion has become a bigger part of the overall bill to the point where they can't write it off anymore," Winter says. "It's become a consumer model where they have got to start collecting."

Chad Williams, CEO of Affiliated Creditors, a collection agency on Thompson Lane that focuses on hospital debt, says hospitals are turning to his company to help generate cash flow.

"Hospitals never want to look like the bad guy," Williams says. "We try to get the blood out of a turnip. I am the guy they call on when they are cash-strapped."

Williams says hospitals are more willing than before to sue to settle debts. He says he is collecting more money, not because consumers are paying more, but because he has more accounts.

Williams says because of the economy, consumers have more bills than they did several years ago, and some are experiencing trouble in the housing market. His company works with patients on the back end to see if they qualify for charity programs.

Jack Abernathy, sales director for Automated Collection Services Inc., says hospitals have been increasing the number of accounts turned over to collection agencies over the past five years.

Now, he says, they are doing a better job of collecting money on the front end.

Hospitals are also offering discounts and incentives for customers who pay their entire bills up front, Abernathy says.