It’s from my understanding the er cannot denying seeing you even if you can’t or refuse to pay. So in the event of a very large bill and the hospital does a charity right off how does the hospital make money. In addition, it is my understanding that if you don’t care about your credit unpaid medical bills won’t impact you since it isn’t a government expense (like student loans) so they can’t garnish wages. So how do they make money on these cases? Also my mom is a doctor and has said that right offs are very common since insurance only covers a percentage. Why would a hospital do this since they don’t get paid?
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I had a kidney infection when I had no insurance. With a 104F fever, dizzy, confused, went to the closest clinic knowing I had no insurance. They refused to care for me since no insurance (cue “This is America” background music) but they referred me to the Methodist clinic across town. The attendant told me there was a grant I would qualify for, so I took the bus there.
Not a hospital, had to go back each day for 5 days. Three days of multiple bags of IV’s, the attending person said I had no trace of sodium in my system, but I recovered. I never got a bill or summary of charges. My recollection is fuzzy, being near death and all. I’m lucky to be alive because of that grant.
Short story – absolutely everything charged is so overpriced that they still profit enough to have a well paid board of directors and investment in expansion.
They don’t make money on those cases, but make plenty enough off other cases to offset it.
Remember that insurance companies are making *billions* off healthcare, because they managed to create a system that demands more money than is actually needed for treatment.
The nature of our healtcare/insurance system has created super inflated costs of care. (Notice I didn’t have to ask if you are in the USA. No other nation has this issue) They crunch the numbers so that they still turn a profit
It doesn’t actually cost the hospital $400 in resources for that checkup you got. So if you pay out of pockst it’s a bonus. If you have insurance then a portion or all of the cost is covered. But HMOs encourage this inflated price – even though they are paying it sometimes – because premiums are SO high, and most people pay such large dedeuctibles, that the HMO still makes a profit.
When hospitals are operating at a thin margin of profit, it’s because the insurance companies are denying claims. That’s their biggest customer, not out-of-pocket costs.
They likely sell the debt to debt collection agencies, in where the right to receive collections is transferred to whoever purchased it. This is the best way to recover as much of the out of pocket billings that they incur, but to be honest the hospitals still don’t make much money.
The most profitable divisions of hospitals are usually the cancer centers. This is because insurance is most likely to pay out for the expenses related to cancer. Yep, it sounds fucked up but makes a lot of sense.
This is why medicine and doctor visits have such a high and growing price attached, as any amounts not charged through insurance are basically written off immediately, and they try to bill as high as they can so that they can get something out of insurance or other methods that don’t bill the patient directly. The profit margins are increased in other divisions to make up for losses in the charity case scenarios, as well as unpaid receivables.
If a hospital doesn’t sell the unpaid bill to a debt collection agency and writes it off, it will register on their books as a loss.
However, because of the way hospital and insurance companies interact in the US, a write off of a $3000 bill likely did not actually cost the hospital $3000.
Hospitals are incentivized to overcharge for equipment and procedures because they deal with insurance companies who haggle them all the way to the bank. That’s why insurance companies make a strict distinction between ‘in network providers’ and refuse to pay for ‘out of network providers’ unless you file a claim or for special circumstances. Hospitals who are in-network providers with an insurance company have already struck a deal between each other about how much they will pay for certain procedures and care. Say it costs the hospital $0.25 to give you a Tylenol, and according to the deal with your insurance company, the hospital will only get from them $0.27 per Tylenol they give you. Obviously not all procedures cost the same, and since every contract negotiation start with a back and forth haggling over prices, hospitals are incentivized to inflate their prices to maximize their profit margin within their contract.
This is relatively good for a person with insurance who went to a in-network provider for care but for someone uninsured or out of network, they get charged those huge overinflated numbers and that’s why you get news articles about $75 hospital Tylenol and the like. So when a hospital writes of a bill, they are technically losing money but not as much as you think.
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