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How Medical Debt Forgiveness Benefits Hospitals

John Commins, for HealthLeaders Media, May 15, 2013

"These families were working very hard to get their lives back together and they were making some very difficult economic decisions," he says.

"Realistically a lot of hospitals and providers are at best going to collect pennies on the dollar. Is there a way to convert that account receivables that will never be received into something that has real value for hospitals in the form of qualified health plan enrollment to make sure that the next time the individual shows up at the facility they are in a commercial plan that pays commercial rates and from which the facility is going to have a realistic prospect of receiving reimbursement?"

Haile says forgiving debts on money that more than likely will never be collected will benefit hospitals in several ways.

"It's a pretty easy case to make. Hospitals have the ability to target this relief to people who sustain enrollment in qualified health plans. It is not like they are writing off all debt. They can limit it to the folks with whom they induce real behavior change. In that sense it is highly efficient," he says.

"No. 2 is there is just a public relations win with this. And thirdly, in terms of how hospitals spend resources, this has incredibly low cost generating very high return. You don't see this kind of thing very much. Because you are working with clients who already incurred debt with you, it is highly likely that they are going to have medical utilization going forward."

"It's a win, win, win all the way around. The hospital is going to have nice PR. You are going to burnish the brand. You are going to help people in terms of being insured, and hopefully there will be some revenue for the hospital because the next time the person shows up they won't be uninsured."

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1 comments on "How Medical Debt Forgiveness Benefits Hospitals"


JKuriyan (5/15/2013 at 3:55 PM)
What is not clear is if the hospital will use its notorious "charge master" to decide on the size of the debt. I hear that non-profits often use the charge master to calculate the "charity" service they contribute to earn their non-taxpaying status. Two more reasons why a charge master with fictitious and exhorbitant charges can help a hospital.