The burden of unpaid hospital bills

It sometimes seems as if hospitals can’t win when it comes to collecting payment for services rendered.

No hospital – or medical clinic or dental practice, for that matter – can realistically expect to stay in the black if it isn’t diligent about getting customers to pay what they owe. It’s what any business would do. But the public often seems to resent the fiscal side of running a hospital and the implication that money is part of the equation.

It makes for an uneasy balance, to be sure.

How far can hospitals ethically go in order to collect on patient bills? This was a big issue in Minnesota five or six years ago, when some large hospital organizations, primarily in the Twin Cities, were alleged to be harassing and abusive toward patients who owed them money. The upshot was an attorney general’s agreement signed by the majority of the state’s hospitals, pledging to follow fair billing and collection practices.

Minnesota hasn’t been alone. A 2005 study by the Center for Studying Health System Change found a growing number of hospitals around the U.S. were being forced to address their billing and collection practices, often as the result of negative – and in many cases well-deserved – scrutiny. In some instances, collection agencies were going so far as to place liens on the homes of patients who were struggling to pay their hospital bills.

Unfortunately it doesn’t take much these days to rack up a large hospital bill. Even for someone with health insurance, there might be a $2,000 or $5,000 deductible that has to be paid out of pocket. Those who are uninsured and need hospital care generally don’t have a prayer of ever paying back the full amount they owe, especially if expensive treatment or a lengthy hospital stay is involved.

These people need help, not harassment. Over the past five years hospitals have become better at recognizing this. They’ve gotten more proactive about identifying patients up front who might be eligible for charity care and steering them toward programs that can help.

The distinction is an important one. If someone truly doesn’t have the resources to pay their hospital bill in full, it makes far more sense to place that person in the charity-care category right away, rather than labeling the unpaid bill as bad debt, a move that potentially opens the door to aggressive pursuit of payment. Bad debt, on the other hand, is what happens when patients just don’t pay, or don’t cooperate with the hospital in making arrangements to pay.

Needless to say, there can be a fine line between “can’t pay” and “won’t pay”, and where this line is drawn is often a matter of perception. Given the increasing financial pressures on the health care industry, though, it’s an issue providers and consumers alike can’t really afford to ignore.

Is it crass for hospitals to want patients and families to meet with financial staff to discuss payment arrangements for $2,000 worth of out-of-pocket expenses? Is it tacky for hospitals and medical clinics to ask for a $10 or $25 copayment up front? Many people would say it is. Part of health care, after all, is about caring for patients. When you insert money into the unique relationship between patient and provider, it can come across as antithetical to the values that lie at the heart of health care. At the very least, it’s often viewed as an unwelcome intrusion.

The fact of the matter, though, is that hospitals, physician clinics, dentists, optometrists and the like can’t survive on good will alone. They need money to keep the doors open, keep the lights on, run their equipment and pay their staff. Getting paid for providing a product or service is how the American economy operates. We might like to think health care is different, or that it’s somehow exempt from financial considerations, but it isn’t. Providers who aren’t diligent about the bottom line risk being swamped in a tide of red ink and possibly going out of business – and no one is served well when this happens.

Taking care of people who are sick and vulnerable, and taking money from them for doing so, seem like opposing demands, and in a moral sense they are indeed opposing demands. Maybe society can never completely make its peace with this. There’s a balance here somewhere, though, and we might have a better chance of finding it if we could stop tiptoeing around the fact that even in health care, it matters when you don’t get paid.

4 thoughts on “The burden of unpaid hospital bills

  1. Who would be the correct agency or department to contact if you have information about and individual that has defrauded a hospital for a huge hospital bill.

  2. Once I saw a figure for the overall per cent of u paid hospital bills,but I can’t find it now. I think it may have been over half. I see a total of 41-43 billion dollars, but does anyone have the per cent unpaid?

    • Janet, it seems to vary depending on the hospital and patient population. Overall, the national average is somewhere around 5-6 percent. Some hospitals of course are higher than this, and some are lower.

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