Days after an article was published last month in the prestigious Journal of the American Medical Association spotlighting Mary Washington Healthcare’s aggressive debt collection policy, MWH announced it would “suspend the practice of pursuing legal action for unpaid bills”—including filing lawsuits for bills less than $300.
According to the JAMA study, led by Johns Hopkins surgeon Dr. Martin Makary, MWH sued more former patients in 2017 for unpaid bills than any other hospital in Virginia. Some court judgments resulted in garnishment of the debtor’s wages, a particularly pernicious form of debt collection that should be considered a last resort.
But the lightning speed in which MWH suspended all legal action on unpaid bills once its debt collection policy was publicly exposed indicates that filing lawsuits and garnishing wages for even small amounts owed was routine, and that hospital administrators were well aware that the policy was at odds with their carefully cultivated image as a caring and compassionate not-for-profit institution that also happens to receive a large infusion of taxpayer funding.
The other side of the coin is the fact that MWH provided more than $60 million in charity care—on top of the $20 million in bad debt generated last year by people who “can pay and should pay” but refused to do so, according to MWH senior vice president Eric Fletcher.
Contrary to the mistaken belief in some quarters that all medical care should be “free,” the money needed to meet MWH’s payroll and pay its own bills has to come from somebody’s pocket. If some patients don’t pay, the financial burden inevitably falls on others in the form of inflated bills to cover the hospital’s costs.
Deadbeats add to the price of health care for everybody, and if all other attempts at collecting what’s rightfully owed fail, pursuing them in court is a legal and appropriate remedy. So MWH’s wholesale abandonment of this debt collection tool for those who “can pay and should pay” doesn’t quite add up.
That’s because MWH doesn’t want the public to focus on the fact that hospital bills are grossly inflated to cover all the patients who are indigent, don’t have insurance, or are covered under Medicaid and Medicare, which doesn’t pay the full cost of their care. The extra cost of treating all of these people is added to the bills of other patients who are expected to pay not only for themselves, but to subsidize the non-payers as well.
People who have insurance that picks up most of the tab don’t pay much attention to the fact that the hospital bill they receive is not a quid pro quo for services rendered. But it can be a catastrophe for a subset of working people who make too much money to qualify for “free” care or financial assistance, but not enough to afford adequate insurance that covers the hospital’s subsidized care as well as their own.
Maybe to keep their premiums affordable, they bought a policy with a high deductible or limited coverage, or just decided to roll the dice and buy no health insurance at all. When they couldn’t pay the inflated charges, MWH hauled them into court.
MWH’s claim that other hospitals merely evade the bad publicity by selling their unpaid billings to outside debt collection agencies may be valid, but doesn’t address the real problem. Hospital billing is not an accurate accounting of what medical services were provided to a particular patient. Government officials, doctors and insurance companies go along with this fiction—to a point. Then the lawyers step in.
Medical debt is already the number one cause of bankruptcy filings in the United States, even as non-profit hospitals like MWH pay their top administrators six- or even seven-figure salaries. Virginia’s recently passed “bed tax” on hospitals to fund Medicaid expansion exacerbates the situation by inflating paying patients’ bills even more to cover government funding shortfalls. But the cost of charity care that is buried in hospital bills is also one of the reasons many working people cannot afford their own health insurance, since this hidden tax drives up premiums.
It’s neither charitable nor compassionate to force working-class people to pay more for a hospital stay or ER visit so hospitals can provide “free” medical care to others—or for a court to garnish their wages when they can’t come up with the extra cash. But this practice will continue in some form until there’s complete transparency in hospital billing practices, and public officials start fully funding the entitlement programs they pass.