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Hospital Collections Are Ugly but Not the Real Problem

written by Guest Contributor James Bacon August 11, 2018

I have big issues with the way hospitals conduct business in Virginia, especially the highly profitable nonprofit hospitals, as I have repeatedly made clear on this blog. But there’s one thing I don’t have a problem with — the fact that they try to collect their bills. Some observers find that practice problematic. Witness the recent story published in the Virginia Mercury, which kicks off this way:

Annie Washington is 60 years old, has diabetes and no insurance. If she needs to see a doctor, she winds up in the emergency room. But while hospitals can’t turn indigent patients away, they can still bill them. And when patients can’t afford those bills, collection lawsuits often follow.

“I work at McDonald’s,” the Henrico County resident said after a recent hearing over an $860 lawsuit filed by the doctors group that staffs VCU Medical Center. “There’s no insurance there.”

Virginia medical providers filed more than 400,000 lawsuits over the past five years, netting more than $587 million in legal judgments against their patients, an analysis of state court records by the Virginia Mercury has found. The review relied on data collected by virginiacourtdata.org, which aggregates online state court records.

Virginia Mercury deserves credit for plumbing a data source which heretofore has gone unreported upon. I appreciate the reporters’ enterprise. But I take issue with the implication that there is something disreputable about making an effort to collect unpaid bills. The capitalist system is based upon the premise people pay for the things they buy. The underlying problem with Virginia’s health care system is not that hospitals ask people to pay their bills but the insane way — insane, as in utterly disconnected from reality — that they calculate the bills in the first place.

Hospital charges, which are deeply discounted for Medicare, Medicaid and private insurers but not for individuals, are obscenely and unconscionably high. Many people, perhaps most people, are unable to pay the charges. But what are hospitals supposed to do? Not bill people without insurance? Or, if they don’t pay, make no effort to collect? If it is widely known that there are no repercussions for failure to pay, what incentive is there for anyone to pay?

Hospitals routinely provide charity care and write off unpaid bills. But how are they supposed to know who has the capacity to pay and who doesn’t unless they try to collect?

Sentara Health System, according to Virginia Mercury, uses predictive data analytics like credit scores to surmise who might be able to may and who might not. Bon Secours has adopted a policy of forgiving the debt of anyone whose income is 200% of the federal poverty level. That’s all very admirable, but there’s always a cut-off at which the people just below the line (whether credit score or income) get off free and people just above the line get stuck. A precept of the welfare state is that no matter where you set the line, there is always someone who draws the wrong side of it and there’s always someone deserving of compassion. Because there is always a victim, there is always a reason to draw a new, more forgiving line. That is not a sustainable model for a health care system.

If we want to address root causes, we must address the skyrocketing price of healthcare — both the cost of providing the care, caused by the cartelization of the industry, and the setting of insanely high nominal prices, the sole purpose of which is to establish a starting position for negotiating with insurance companies.

James Bacon is the publisher of BaconsRebellion.com 

Hospital Collections Are Ugly but Not the Real Problem was last modified: August 11th, 2018 by Guest Contributor James Bacon
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Guest Contributor James Bacon

A graduate of the University of Virginia, James A. Bacon has practiced journalism throughout Virginia – in Martinsville, Blacksburg, Roanoke, and Richmond. In 2002 he launched Bacon’s Rebellion as a non-partisan website and blog dedicated to public policy issues in Virginia. He lives in Henrico County.

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