Medical debt is not ‘debt’ if you never owed it in the first place

Among the myriad astonishing issues with the US healthcare system, perhaps none is more egregious than the act of chasing down sick people for money for services that they can’t afford.

Unless, of course, you count the act of chasing down sick people for money that they can’t afford and that they don’t owe in the first place. I’m not sure there’s a word for that in the dictionary.

But that’s what’s happening at numerous US hospitals according to a recent New York Times exposé. In their investigation, the Times revealed that one of these culprits is an outfit known as Providence, which is one of the largest non-profit health systems in America, with more than 50 hospitals and almost 1,000 clinics under its umbrella. Its revenue last year exceeded $27bn. It’s also sitting on $10bn in cash that it uses to make investments in the mould of a Silicon Valley venture capital investor. So, the last thing it has is financial problems. But you and I know there are lots of Providences out there. This one just happened to get caught and was exposed.

To be clear, this is not about collecting medical debt. This is about collecting money from people for the provision of services for which those services should have been provided at no cost.

You can’t have debt for something that is free.

However, these predatory practices are so thoughtfully and thoroughly crafted that outside consultants like McKinsey are brought in to help ensure a seamless and coordinated communication strategy is put in place to collect every last red cent.  McKinsey was paid $45m dollars in 2019 alone for its consulting work for Providence, according to records. And you’ll fondly remember that McKinsey has a history of questionable healthcare consulting, as evidenced by its role in fuelling the opioid scandal for which it is being sued. And, of course, juxtaposed with its role in helping fuel the opioid crisis in America, is the most recent revelation that it was working both sides while fuelling the crisis. A special committee charged with investigating the opioid crisis concluded that there were ‘years-long conflicts of interest at McKinsey, resulting from its work for the federal government at the same time that it was advising opioid manufacturers’.

So, Providence was not alone. It had help. And all the others have help too. You can’t collect tens of millions of dollars in unpaid medical ‘debt’ without some structured approach to recovering the funds. And to be fair, McKinsey is not alone in providing help. Organisations like Providence have also engaged with third-party debt collection agencies that use aggressive tactics like wage garnishment and the reporting of unpaid debt to credit bureaus.

And what we’ve also learned is that a significant proportion of the patients being chased for money were not required to pay it in the first place. They qualify for free care or substantially reduced care – but no one told them.

This is, perhaps, the most repulsive aspect of the behaviour of organisations like Providence. That they prey on those who have low health literacy. That they take advantage of those who do not know better, despite the fact that Providence does. Part of the problem lies in the fact that the Affordable Care Act requires non-profit hospitals to display their financial policies for all to see, but it doesn’t actually stipulate who those policies should apply to. That decision is left to individual states and is based on a variety of factors like income and family size. It’s a mess.

But here’s the real scary part about all of this. It may not be entirely about the collection of money. Don’t get me wrong. These hospital and healthcare systems want to collect the millions that they pretend they are owed. But the secondary ‘benefit’ of harassing patients for dollars that they sometimes don’t owe is that it de-risks future patient streams.

You see, the (un)intended consequence of this behaviour is that patients are now scared to ever go back to a Providence facility because they are going to be harassed for money. They avoid care. For themselves and their families. And they tell their close friends and relatives not to go either. Their friends and relatives listen. Organisations like Providence now end up with fewer cases where free/charity/subsidised care is required and where more insured/covered care is delivered. Providence doesn’t have to chase people for money. Or hire McKinsey or debt collection agencies.

We are always told to ‘follow the money’. Sadly, in doing so, we find a system that is broken and that takes advantage of people. And for which there was never any money to follow in the first place.