Study: Hospital consolidation exacerbates medical debt
TL/DR –
Research from the Urban Institute and the Private Equity Stakeholder Project found that hospital market concentration and private equity’s role in healthcare billing and debt collection is worsening the U.S. medical debt crisis. Around 100 million Americans owe over $220 billion in medical debt, with communities of color and those living in the South disproportionately affected. This issue is exacerbated by hospital consolidation, which reduces competition and raises healthcare prices, as well as the increasing role of private equity firms, which use aggressive debt collection practices and high-interest financing tools.
Hospital Market Concentration and Private Equity’s Role Exacerbate US Medical Debt Crisis
New findings from the Urban Institute and the Private Equity Stakeholder Project suggest that the concentration of hospital markets and the increasing role of private equity in healthcare payment processes exacerbate the country’s medical debt problem.
These practices push Americans further into medical debt due to aggressive debt collection and inflated medical charges. Nationwide, almost 100 million Americans owe over $220 billion in medical debt, according to the Consumer Financial Protection Bureau (CFPB).
The Problem
Medical debt crisis in the US has multiple root causes. Dominant medical companies are acquiring private practices and smaller pharmacies, resulting in fewer choices for patients and increased costs. Hospital groups often issue errant bills and add surprise fees to patients’ bills.
Moreover, the consolidation of hospitals, according to Harold Miller of the Center for Healthcare Quality and Payment Reform, leads to increased healthcare prices, worsening the medical debt problem. In 2017, 90% of hospital markets in the US were highly concentrated, and hospital consolidation has since reached an all-time high.
Possible Solutions
The Urban Institute and the Private Equity Stakeholder Project propose several protections for patients and consumers to alleviate medical debt. The Biden-Harris administration’s American Rescue Plan included funding to eliminate $7 billion in medical debt nationwide by 2026. Vice President Kamala Harris also announced a proposal to remove medical debt from the consumer credit reports of 15 million Americans.
In North Carolina, Gov. Roy Cooper announced the Medical Debt Relief Incentive Program to eliminate $4 billion in medical debt for 2 million low- and middle-income North Carolinians over the next two years.
The Private Equity Stakeholder Project suggests banning hospitals from levying interest on payments due for patients who qualify for financial assistance and instituting 2% caps on interest for patients who don’t qualify. The Urban Institute suggests implementing more-stringent requirements on nonprofit hospitals and better enforcement of antitrust laws to prevent more anti-competitive mergers, which would promote a more competitive health care market. Introducing a public insurance option plan could also help reduce health care costs nationwide by lowering premiums and out-of-pocket expenses for consumers.
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