Collecting Medical Debt: Who?s Your Bogeyman?

Yesterday’s Wall Street Journal article, “Hospitals Put Patients’ Debt Up for Auction,” explores another tool the healthcare industry has at its disposal to redress the crisis of unpaid receivables.

Note the “agent,” the subject, the “do-er” in that sentence: the healthcare industry. Patients who don’t or can’t pay their medical bills owe that money to a hospital (for example). The hospital will try to collect on the account internally. The hospital may then outsource the collection effort to a contingency agency specializing in healthcare paper, or sell the account outright to a medical debt buyer—with many safeguards and strings attached. The hospital is the prime mover of all collection efforts, internal or external. But agencies and debt buyers wear a scarlet letter (which might just be an “A” like Hester Prynne’s, but typically is inferred to mean something a little more off-color than “adultery”) that credit issuers somehow escape.

Consider this quotation from the WSJ article: “’The hospital is an institution in the community, has a reputation, in many cases has a nonprofit mission to uphold,’ says Anthony Wright, executive director of the consumer-advocacy coalition Health Access California. ‘Once it goes to collections, that starts a process that can get a lot more antagonistic, a lot more aggressive, and a lot more damaging to a family’s credit history and financial future.’”

In other words, hospitals have reputations (are reputable?), missions, and are members of communities. Collection agencies are antagonistic, aggressive, and damaging to patients’ financial pasts and futures.

Literature and the movies provide a useful analogy here. Ask ten people on the street to describe Frankenstein and here’s what they’ll likely say: bolts, fire, green, monster, aaarrrrgh! What they won’t say is “Victor.” Dr. Victor Frankenstein. The man who created a creature that the world misunderstood, came to hate, and tried to destroy.

Calling Victor’s creation “Frankenstein” is a misnomer, a misstep, a misapprehension. But that big green guy is a lot more entertaining as a bogeyman than boring old Victor. And so it is with the accounts receivable management industry.

Torches are lit, pitchforks are raised, and the mob chases blindly after a shadow of the Good Doctor (hospital?) who gave birth to this mess in the first place.