Kaiser Health News and the Urban Institute looked at areas with high medical debt and compared them to hospitals’ profit margins. It profiled the North Texas region surrounding Dallas-Fort Worth.
Of the nation’s 20 most populous counties, none has a higher concentration of medical debt than Tarrant County, home to Fort Worth. Second is Dallas County, credit bureau data shows.
Does a lot of medical debt indicate that a community is struggling to pay their medical bills and the local hospitals are struggling as a result? That was not the case according to the analysis.
“You might think that hospitals in communities where patients have a lot of debt would be less profitable, but that doesn’t seem to be the case,” said Anuj Gangopadhyaya, a senior Urban Institute researcher who worked with KHN on an analysis of hospital finance and consumer debt data in U.S. hospital markets.
So why does some hospitals thrive in an area with high medical debt – that is patients who struggle to pay their bills – while other hospitals struggle when their patrons cannot pay their bills? It’s mostly about price gouging, consolidation, and the market power to hold down wages.
Industry experts say the most profitable medical centers — like those around Dallas-Fort Worth — have developed business models that allow them to prosper even if their patients can’t pay.
One key is prices. These hospitals maximize what they charge for everything from a complex surgery to a dose of aspirin. Most of those charges are picked up by health insurers, which still pay a much larger share of hospital bills than patients do, even those with the highest deductibles.
Across the country, many medical systems have strengthened their market power in recent years by consolidating, buying up smaller hospitals and physician practices, which enables the hospital systems to charge even more.
The Dallas-Fort Worth metro area has the highest hospital prices in Texas. Prices in the area are 13% higher than the national median, according to the Health Care Cost Institute.
In addition to charging more, the most profitable hospitals frequently squeeze more savings from their operations, holding down what they pay workers, for example, and securing better contracts from suppliers.
The hospitals in North Texas are thriving. One pediatric hospital system even paid $2.5 million to put its name on a high school football stadium in the far Northern Dallas suburb where I live.
Almost everything about the opening of the 2019 Prosper High School Eagles’ football season was big.
The game in this Dallas-Fort Worth suburb began with fireworks and a four-airplane flyover. A trained eagle soared over the field. And some 12,000 fans filled the team’s new stadium, a $53 million colossus with the largest video screen of any high school venue in Texas. Atop the stadium was also a big name: Children’s Health.
Business has been good for the billion-dollar pediatric hospital system, which agreed to pay $2.5 million to put its name on the Prosper stadium. Other Dallas-Fort Worth medical systems have also thrived.
Some experts say this type of business model is not sustainable and not likely to survive.
As bills rise, hospitals are having a harder time collecting. Last year, nearly 1 in 5 patient bills generated by hospitals for people with insurance topped $7,500, according to an analysis of hospital billing records by Crowe LLP, a Chicago-based accounting and consulting firm. That was more than triple the rate in 2018.
“These are bills that fewer and fewer patients out there can afford,” said Brian Sanderson, a senior Crowe health care consultant and former hospital executive. Indeed, hospitals manage to collect less than 17% of patient balances that exceed $7,500, according to Crowe’s analysis.
As you would expect stakeholders disagree on the cause of patient medical debt.
Hospital industry leaders blame the patient debt on health insurers, citing the rise of high-deductible plans and other efforts that limit coverage. “The last thing that hospitals want is for their patients to face financial barriers,” said Molly Smith who leads public policy at the American Hospital Association. “Hospitals are in there trying to work on behalf of patients.”
So, it’s health insurers who are forcing patients into high deductible plans causing high medical debt? No, that’s Obamacare that’s forcing people into high deductible plans. This is a big problem also because of outrageous prices for medical services. These services are performed at hospitals which are supposedly “non-profit” operating for the benefit of their communities. That’s not the case, however. They’re in it for the money. I began my career in as a hospital accountant. My old employer was mentioned in the Kaiser Health News article.
Read more at KHN: Few Places Have More Medical Debt Than Dallas-Fort Worth, but Hospitals There Are Thriving
Thanks for posting. I have studied medical debt a lot and sometimes I am puzzled…….
1. How did David Zipprich have health insurance and still owe $200,000? This could be solved in 30 minutes if we adopted the Medicare rule for all insureds….namely, if a claim is denied, the patient is generally not liable….
2. The median medical debt is $1400, which is not disturbing. Most people owe that much to their auto mechanic.
3. One fourth of debts are over $10,000. Were these persons all uninsured? Doubtful. Did they all have policies with no out of pocket limit?
Comments welcome!
Bob, I forgot all the details but I too read the analysis that found most medical debts were quite manageable. Debts approaching five figures were usually related to one event requiring hospitalization. I suspect (just like most medical bankruptcies) high medical debt is partly the result of not working because you’re in ill health.
I have read that many Americans are not prepared for an emergency bill over something like $600 but yet I’ve also heard the average new car price is nearing $50k. Somebody must be buying them.
That said, yes, medical prices are outrageous and nonprofit hospitals should have a bigger requirement to benefit the community. Health care needs reformed in ways that boost competition among providers rather than allowing them to consolidate their power to extract more revenue from employer plans and government.
When you lose your job, you suddenly have a lot of bills and you have to prioritize them. Food and heating first, car payments to look for a new job, etc. Paying a doctor you may never see again is low on the list. Paying a hospital that appears to be rolling in cash (just look at the employee parking lot, or the art work in the lobby), is also low priority. What are they going to do, come out and break your leg again?
I was in a no-deductible HMO plan in one of early jobs. I loved it. In later jobs I had some higher deductibles, and I made more money, but I was always slow to pay. The doctors just pissed me off, irrational as that is.