Hospitals auctioning off patient debt online

Wed, 04 Jun 2008 06:59:57 -0400

Struggling to cut their bad debt ratios--some of which are lowering the stock prices of publicly-held chains--hospitals are beginning to use a new channel to collect on patient bills. Rather than simply hiring collections agencies, some are beginning to put patient debts up for auction online. Bidders on the debt may include the same agencies that serve the hospitals, some of which provide guaranteed payments to hospitals in exchange for giving them access to the debt. Meanwhile, the auctions are also attracting other companies that buy the debt outright.

Many of these auctions are run through ARxChange.com, a TriCap Technology Group site, while others use medipent.com's Medipent LLC. The companies say that they vet collectors to see that they will use the right tactics before participating in auctions, and also, try to make sure that collectors comply with the hospitals' standards for collections (such as whether they record phone calls). Also, hospitals have the final say over who bids on their accounts, and at least on ARxChange.com, don't necessarily choose the highest bidder.

Despite these safeguards, some critics argue that auctions change the dynamics of hospital collections unfavorably. Usually, collectors are paid a percentage of what they collect, sometimes more when they collect more. But in many of these cases, however, winning bidders get to keep all of the money they collect. This gives them a greater incentive to be aggressive in their tactics, some observers say.

To learn more about this trend:
- read this Wall Street Journal article (sub. req.)

Related Articles:
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In 2007, bad debt rising for hospitals
MN governor vetoes medical debt history bill
FL hospital sued over sale of $1.9B in bad debt

MN governor vetoes medical debt history bill

Wed, 14 May 2008 06:59:55 -0400

Minnesota Gov. Tim Pawlenty (R) has vetoed a bill that would have banned healthcare providers from collecting, using or sharing medical debt information to qualify patients prior to providing elective services. The bill, which had passed both of the state's legislative chamber's by a broad margin, permitted providers to determine patient income levels and assets, but only to qualify them for charity programs or state and federal reimbursement programs. Pawlenty, however, called the bill "extremely broad," and said that it could force providers to make big changes in how they offer routine medical services. Supporters of the bill say they'll probably rework the text to try and meet the governor's objections.

To learn more about the bill:
- read this Modern Healthcare article (reg. req.)

Related Articles:
MN bill blocks hospitals from using debt info pre-care
Trend: Hospitals requiring upfront payments before treatment
HMA adopts tougher collections strategy
Hospitals collecting patient bills up front

Patient Bills

Hospitals auctioning off patient debt online

MN governor vetoes medical debt history bill