Medical Debt 101: How Different Hospital Types Affect Your Bills

Medical debt has become a significant financial burden for many Americans. Approximately 100 million adults in the United States face medical debt, ranging from under $500 to $10,000 or more, according to a report from the Kaiser Family Foundation.

Disputing Errors and Negotiating Payments

If you believe there are errors in your medical bills or are struggling to make payments, it's crucial to take action. Here are some steps you can take:

1. Request an Itemized Bill: Obtain an itemized bill from the healthcare provider to ensure accuracy and identify potential errors or overcharges.
2. Negotiate Payment Plans: Many healthcare providers will work with you to set up a reasonable payment plan for your budget.
3. Seek Financial Assistance: Many hospitals and healthcare facilities offer financial assistance programs for low-income or uninsured patients. Inquire about these programs and their eligibility requirements.
4. Dispute Errors: If you find errors in your medical bills, dispute them in writing with the healthcare provider and the credit bureaus, if necessary.

Understanding Hospital Classifications:

To better understand the medical debt landscape, it's helpful to understand the different types of hospitals:

1. Private, non-profit hospitals:
   1. The structure of most hospitals (two-thirds of all urban hospitals in the U.S.)
   2. Many holding companies own and operate profit-making businesses like hotels and restaurants. Just because they're non-profit does not mean that their organizers are not making large sums of money from their operations.
   3. Many non-profits make huge profits, calling them "excesses" and spending them on expanded salaries, new construction, and fancy, new high-tech equipment.
   4. Worldwide, most hospitals are run on a non-profit basis by governments or charities.

1. Proprietary hospitals (for-profit):
   1. Investor-owned.
   2. A master parent corporation operates a chain of profit-seeking "franchises" around the nation.
   3. Entrepreneurial ventures motivated by profit.
   4. Comprise of about 15% of all hospitals.
   5. They usually charge about 11% more than non-profits for the same services.[1] To satisfy shareholders and maintain strong profits, these hospitals have been known to overuse technology, overtest their patients, and overprice their goods and services.
   6. Have been accused of "crème-skimming by selectively admitting only those patients who can be treated at acceptably high-cost ratios."[2]
   7. The hospital physician staff are usually shareholders and are often criticized for creating conflicts of interest.

1. Public hospitals:
   1. Owned by the government and receives government funding.
   2. They usually exist to serve the poor and uninsured.
   3. Usually, statutory obligations are to be fulfilled.
   4. Often associated with medical schools.
   5. The largest public hospital system is the NYC Health & Hospitals Corporation.
   6. Some have argued that the increase in the number of uninsured has drained public hospitals to near bankruptcy.[3]

Hospital governance: Three pillars of government.

1. Board of Trustees
2. Chief Administrator
3. Medical Staff

The three competing personality roles often clash over power. Advances in scientific medicine gave rise to the Chief Administrator, who manages operations. Often, resolution amongst these competing pillars results from compromise versus organizational logic.

Hospital inefficiency and spiraling costs are highlighted as substantially contributing to this country's healthcare crisis.

In New York, many medical debt lawsuits are brought by law firms on this Debt-Collector List.

How many Americans are uninsured:

At least 28.2 million Americans lack health insurance, and are ineligible for financial assistance. The Affordable Care Act decreased that number from 44 million.[4] Most uninsured people are in low-income families and have at least one worker in the family.

Most middle-class and well-to-do Americans have private insurance (although many claim inadequate). Most poor people are covered by Medicaid.

Reasons for being uninsured among uninsured, nonelderly adults, 2016:[5]

• Cost is too high: 45%
• Lost or changed employers: 22%
• Lost Medicaid: 12%
• Employer does not offer or ineligible coverage: 10%
• Family status change: 10%
• "No need" for health coverage: 2%

Feel free to check out this list of 11 Good Medical-Debt Protection Laws in New York. Also, here is an introduction to our medical-debt page.

Much of the above was structured after a wonderful appendix in the back of the top collection-action treatise I have found: NCLC treatise, Collection Actions.[6] It was authored by Alan A. Alop, Defending Hospital Collection Cases (July 2001).

Additional Resources

For more information and support regarding medical debt, consider consulting the following resources:

• National Consumer Law Center's Guide to Medical Debt
• Consumer Financial Protection Bureau's Medical Debt Resources
• State-specific medical debt protection laws

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