Collection Lawsuits Filed by Hospitals Not Just a Result of Tough Policies, But Issues With Healthcare in General

The complicated intersection of hospital pricing, health insurance, and access to adequate healthcare facilities is driving a spike in the number of lawsuits being filed by hospitals seeking to recover unpaid debts from former patients, according to a pair of published reports, including one from The New York Times.

In its report, The Times looks at the practices of Carlsbad Medical Center in Carlsbad, N.M., which has filed more than 3,000 lawsuits against patients in the past four years, including many individuals who have been sued more than once. After finding out that its practices were being investigated by The Times, the hospital said on Friday that it would no longer sue patients whose income falls below 150% of the federal poverty guidelines.

But while it was looking into the lawsuits it had filed, the report revealed that the prices charged by the facility were significantly higher than what other hospitals were charging, regardless of whether the patient had insurance or not. A survey released in May, for example, revealed that private insurers paid Carlsbad Medical Center five times more than what Medicaid would have paid for the same services. One employer, in a 2015 presentation, calculated it was cheaper to pay to send employees to Hawaii for a procedure then to use the Carlsbad Medical Center.

The issue for residents of Carlsbad is that the next-nearest hospital is 45 minutes away.

Patients of the hospital who have been sued complained about a lack of transparency when it comes to the prices of a visit to the emergency room or a procedure and a general lack of interest from the hospital in trying to work out unpaid debts.

The look at the practices in Carlsbad follow similar efforts in Oklahoma, Memphis, New York, Missouri, and Virginia, which have also made changes to its debt collection practices as a result of bad publicity.

Meanwhile, a study from a Connecticut think-tank shows that the number of collection lawsuits filed by hospitals in that state is declining dramatically.

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