For Some Hospitals, Debt Collection Is More Profitable Than Medicine

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At present, 43 million Americans are carrying a grand total of about $75 billion in unpaid medical debt.

As medical care has become more expensive and health insurance companies have increased out-of-pocket costs to patients, hospitals and doctors have been forced to get more serious about collecting monies owed from both parties. More and more hospitals are turning to debt collection as a separate stream of revenue, finding it can be even more lucrative than providing medical care.

HCA, the nation’s largest for-profit hospital chain, has a subsidiary called Parallon that boasts on its website about collecting $41 billion annually. MedNax Inc., a company that provides staffing to hospitals for such services as anesthesiology and neonatal intensive care, purchased a billing and collections company in 2015.

St. Mary’s Medical Center and Central Financial Control are both owned by Tenet Healthcare Corp., the for-profit hospital operator. As Tenet and other hospital companies struggle to make money providing medical care, they are turning to the profitable and growing business of collecting debt.

It is unlikely that this movement will subside soon, as the current political climate lends itself toward policies that are sure to undercut the ability of hospitals to sustain themselves on medical care alone.

Collecting payment has become more important as hospitals’ traditional revenue streams come under pressure. Looming cuts to Medicare reimbursements may make as many as 60 percent of U.S. hospitals unprofitable, compared with about 25 percent currently, according to a 2016 Congressional Budget Office analysis.

In the meantime, 43 million Americans are carrying a grand total of about $75 billion in unpaid medical debt, and according to the Consumer Financial Protection Bureau:

Roughly half of all collections tradelines that appear on credit reports are reported by debt collectors seeking to collect on medical bills claimed to be owed to hospitals and other medical providers. These medical debt collections tradelines affect the credit reports of nearly one-fifth of all consumers in the credit reporting system.