Providing healthcare services does not come cheap and seems to provide slim profit margins for hospitals. On top of that, there are unclaimed medical bills which accumulates throughout the years, causing financial strain and difficulty to upgrade the services.

Not forgetting also, with the rising cost of living, the healthcare prices have also increased—leaving many unable to pay off their medical bills, and ultimately, the amount of healthcare debt to increase.

Hospitals wrestling with metastasising problem: bad debts

Hospitals have more bad debt today – and will continue to see more bad debt. These days, rather than struggling to collect payment from uninsured people, hospitals are being stiffed by insured, often middle-class patients who can't—or won't—pay skyrocketing out-of-pocket costs.

Advocate Health Care, Illinois' largest hospital network, saw its uncollectible accounts increase more than 22% in 2016, to USD269.5 million, or about 5% of its overall revenue. The spike is related to an increase in deductibles and overall patient financial responsibility under today's insurance plans, notes David Szandzik, vice president of revenue cycle for Downers Grove-based Advocate.

Struggling with bad debt burden on the rise: Hospitals are working overtime to get money from patients – and gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building. Photo credit: Crain’s Chicago Business
Struggling with bad debt burden on the rise: Hospitals are working overtime to get money from patients – and gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building. Photo credit: Crain’s Chicago Business

Swedish Covenant Hospital, one of the largest and oldest community hospitals in Chicago, watched its bad debt skyrocket by 71%, to USD11.2 million, in 2015 (the most recent year for which numbers are available). At Lurie Children's Hospital, bad debt increased 22%, to USD11.5 million, in 2015. According to a study from TransUnion, a company that helps hospitals collect unpaid bills, more than two-thirds of patients aren't paying their entire hospital bills, and that number could increase to 95% by 2020. TransUnion found just under half of patients did not pay off hospital bills of $500 or less two years ago. The company attributed the increase to higher deductibles and patient responsibility growing from 10% – 30% over the last few years.

In fact, hospitals are working overtime to get money from patients. That having said, hospitals have gotten much more aggressive in trying to collect at time of service, because their ability to collect on self-pay amounts decreases significantly when the patient leaves the building.

Debt collection means business

Hospitals have reacted by taking matters into their own hands, increasing internal billing staff, proactively contacting patients to set up payment plans and selling past-due accounts to bill collectors. To supplement their income, big hospital operators have also removed the middle-man over the past few years – dealing the problem themselves.

In addition, some of the largest hospital owners in the United States have even decided to get into the business of debt collection themselves due to the financial burden.

Tenet Healthcare Corp, the for-profit hospital operator, for example, is selling off hospitals to help reduce its debt burden—but keeps those hospitals as customers of its debt collection arm. (Collections agency, Central Financial Control – owned by Tenet Healthcare Corp – is the operating name of a Conifer subsidiary called Syndicated Office Systems LLC.)

According to estimates from economists at MIT, Northwestern University and the University of Chicago, the amount of past-due medical debt in the US is around USD75 billion, spread among 43 million people and with impending cuts to Medicare, they venture that 60% of hospitals will become unprofitable in the next year.

This means that patient care has taken the back seat—as the institution, whose sole purpose is to take care of the people, has somehow turned to converting patient’s debts into profit.

The collections agency, Central Financial Control (owned by Tenet Healthcare Corp), is the operating name of a Conifer subsidiary called Syndicated Office Systems LLC. Photo credit: Tenet/Bloomberg
The collections agency, Central Financial Control (owned by Tenet Healthcare Corp), is the operating name of a Conifer subsidiary called Syndicated Office Systems LLC. Photo credit: Tenet/Bloomberg

The foreigner dilemma in Malaysia

While the US is turning patient care into a profitable business, the same cannot be said for Malaysia.

The country’s government hospitals face an uphill battle in trying to recover money spent on treating foreigners, says a hospital official in response to a report back in March 2017—detailing foreign nationals owing up to RM50 million in unpaid hospital bills.

Foreigners from 38 countries owe Hospital Kuala Lumpur (HKL) RM7.87 million in unpaid medical bills from 2012, and RM3 million in 2016 alone.

According to a report by HKL, the top five foreign nationals who had consistently defaulted in settling their medical bills with the hospital—from 2012 to 2016—were from Indonesia, Myanmar, Bangladesh, India and Nepal.

Malaysia’s MOH would try its best to take the necessary action as stated in its Guidelines to Reduce Arrears of Foreign Patients. Photo credit: Hospital Kuala Lumpur/The Star
Malaysia’s MOH would try its best to take the necessary action as stated in its Guidelines to Reduce Arrears of Foreign Patients. Photo credit: Hospital Kuala Lumpur/The Star

“Most foreigners fail to pay because they do not have enough funds, while some simply refuse to pay. They mostly comprise undocumented workers who do not have medical insurance, which is compulsory for all legal foreign workers,” said Secretary General Datuk Seri Dr Chen Chaw Min.

Foreign patients from First World countries such as Germany, Finland, Singapore, Sweden, Japan and the United States are not exempted from healthcare debt, although the figures are negligible.

Coping with the hike in medical debt

SPIKPA and REMEDI are among the insurance providers for foreigners and refugees.
SPIKPA and REMEDI are among the insurance providers for foreigners and refugees.

The Star reported in April 2017 that foreign residents will have to fork out 130% to 230% more in deposits for wards and surgery in a move to reduce medical subsidy for non-citizens.

It is compulsory for all registered foreign workers in Malaysia to enrol in the Foreign Workers Insurance Scheme (SPIKPA) with a premium of RM120 per person yearly, with a coverage of up to RM20,000.

Refugees registered with the United Nations High Commissioner for Refugees (UNHCR) are encouraged to get the Refugee Medical Insurance (REMEDI), with a premium of RM165 for individuals, or RM207 per family yearly; in which the policyholders are covered for up to RM10,000.

Dr Chen said the ministry strived to provide the best health services to the public, regardless of nationality and on a sustainable basis.

“The ministry is concerned about the outstanding bills as these will affect the delivery of health services.

“Therefore, the need to raise the deposit rate for foreigners is in tandem with the increase in charges in 2016,” highlighted Dr Chen. MIMS

Read more:
CGH apologises for recovering S$37 from patient through debt collector
MOH Singapore received 160 overcharging complaints annually
Malaysia’s MOH proposes expansion of full paying patient services

Sources:
https://www.bloomberg.com/news/features/2017-12-18/a-hospital-giant-discovers-that-collecting-debt-pays-better-than-curing-ills
http://www.benefitspro.com/2017/12/20/hospitals-new-profit-strategy-help-others-collect?slreturn=1514945581&page_all=1
https://thehustle.co/hospital-debt-collection/
https://www.thestar.com.my/news/nation/2017/04/15/foreigners-owe-rm505mil-they-make-up-nearly-20-of-outstanding-medical-bills/
http://www.freemalaysiatoday.com/category/nation/2017/03/22/hard-to-collect-hospital-dues-from-foreigners/
http://www.chicagobusiness.com/article/20170324/ISSUE01/170329894/feel-like-the-hospital-is-shaking-you-down-over-that-bill-it-probably-is