Who’s Making Money From Medical Debt?
An article by Brian Grow and Robert Berner in Business Week profiles the revolution in the world of medical debt.
The new reality for a growing proportion of the 50 million or so uninsured Americans is that treating that diabetes, acute gallbladder, or even a child’s late-night earache, means more consumer debt. Current interest rates begin at about 13.5% and increase to 27% for overdue accounts.
According to Grow and Berner, “Collecting from “self-pay” patients … has long been the bane of medical administrators. When they don’t get paid immediately, hospitals typically recover around 10¢ on the dollar owed, even when they hire collection specialists. So hospitals and clinics are bringing in more sophisticated help. They are transferring patient accounts wholesale to finance experts, banks, credit-card companies, and even private equity firms. Many of these third parties use credit scores and risk-analysis software to price the debt and impose interest rates as high as 27% on past-due bills.”
Who are these companies? Many small companies have sprung up in regional markets such as Complete Care of Little Rock Arkansas, but bigger, more familiar companies are entering the field. Some of these include, General Electric (Care Credit), Citi Group, and Capital One. Wachovia is also considering entry into the lucrative market which for GE will amount to $5 billion this year.
“Hospitals can’t just be an interest-free finance vehicle,” says Todd Cole, director of patient accounting at TriHealth, a $2 billion pair of nonprofit hospitals in Cincinnati. “The world of $5 sent to the hospital and they will never send me to collections, never sue me — that world has gone away,” he adds. TriHealth sells patient accounts at a steep discount to firms that specialize in collecting delinquent consumer debt. “Hospitals need their cash,” Cole says. “It is the lifeblood that supports the doctors, the nurses.”
Illness is inevitable and treatment is costly, isn’t that a reasonable argument for the world’s most powerful nation to revisit the creation of a nationalized health care plan?
The complete article (Fresh Pain for the Uninsured) may be read here
Go here to visit “Physicians for a National Health Care Program
Near-panic atmosphere as US Federal Reserve chairman testifies before Congress
Read the Intelligence Daily, article here
Executive Summary:
Bernanke, in his testimony before congress today, admits that the economy has worsened since August in the wake of sub-prime loan defaults which would increase over coming months. He also hinted that the present credit crisis could become a fully blown recession.
Internationally, China has suggested it may react by diversifying its $1.43 trillion in foreign exchange reserves into stronger currencies, and French President Sarkozy said that America’s ”monetary disorder risked turning into economic war” as American exports cheapened and European exports were becoming more expensive.
Bernanke’s appearance before congress was opened with a statement from New York Senator Charles Schumer, the chairman of the Joint Economic Committee.
He said that in the aftermath of the “seizing up of the credit markets” in the summer, “there is now a lack of confidence in credit-worthiness throughout the market… However, while we did weather that summer storm, I’m very concerned that there may be a bigger storm on the horizon. Quite frankly, I think we are at a moment of economic crisis stemming from four key areas: falling housing prices, lack of confidence in credit-worthiness, the weak dollar and high oil prices. Each of these problems alone would be enough of a threat to our economic well-being. But taken together, they are essentially the four horsemen of economic crisis…
“Even our bedrock assumptions are being put into doubt. As housing prices decline, there are real fears that we won’t be able to depend on consumers, the engine of our economy over the past few years, to keep spending. And now we hear that foreign investors may no longer be confident in the dollar as the global currency of choice. I’m not surprised to hear experts, such as your predecessor Alan Greenspan, warn about the threat of recession. I’ve begun to worry about worse.
“In particular, as I watch bank after bank write down bad investments tied to baroque financial instruments that even sophisticated investors don’t understand, I fear for the stability of our financial system.”