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.