Hartford Business Journal

16 HARTFORDBUSINESS.COM | MAY 15, 2023 Trinity Health Of New England's President and CEO Montez Carter said the hospital system's recent partnership with RIP Medical Debt relieved patient debt while recovering some of what the hospital system was owed. HBJ PHOTO | STEVE LASCHEVER Unhealthy Liability CT hospitals see rise in unpaid medical bills, as new models emerge to erase debt By Andrew Larson alarson@hartfordbusiness.com R ising costs are pummeling hospitals and healthcare systems in Connecticut from all sides, and one of the culprits is unpaid medical bills. While hospitals offer financial assistance to those who qualify, many patients — even those with insur- ance — are facing medical bills they can't afford, leading to increasing levels of bad debt on hospitals' balance sheets. Middlesex Hospital wrote off more than $22 million in bad debt in fiscal 2022, up from $17 million in fiscal 2021, according to CEO Vincent G. Capece Jr. In addition, the Middle- town-based hospital pays more than $3 million in charity care annually. Capece said the drivers of unpaid medical debt include the overall increasing costs of care and the prev- alence of high-deductible insurance plans, which typically force consumers to pay thousands of dollars in out-of- pocket costs for medical care before coverage kicks in. "... a lot of people don't even know what their coverage is," he said. With more people on high-de- ductible plans and the overall cost of health care rising, the amount of unpaid medical debt for healthcare systems is expected to rise for the foreseeable future, he said. There's an estimated $195 billion in collective medical debt nation- wide, according to the Census Bureau's 2020 Survey of Income and Program Participation. In Connecticut, uncompensated care rose by $58.1 million (or 7.5%) to $833.9 million in fiscal year 2021, according to the Office of Health Strategy (OHS). Meanwhile, total statewide bad debt — or unpaid medical bills from individuals who don't qualify for charity care — increased by $52.5 million (or 13%) to $456.1 million. As Middlesex and other hospi- tals figure out ways to deal with bad debt, some innovative models are emerging. For example, nonprofit RIP Medical partners with hospitals across the country to abolish patient debt, a problem that afflicts one in five Americans. The Long Island City, New York- based charity eliminates personal medical debt, with support from celebrity donors such as "Last Weekend Tonight" host John Oliver, who purchased $15 million of medical debt on his show, and philanthropist MacKenzie Scott, who donated $80 million. The organization says it has relieved $8.5 billion in debt for nearly 5.5 million families — and those numbers are growing. It recently partnered with Trinity Health Of New England, parent of St. Francis Hospital in Hartford and several other Connecticut care providers, to erase $32.76 million in patient debt. RIP Medical was founded in 2014 by two former debt collectors, Craig Antico and Jerry Ashton, who said they were inspired by the Occupy Wall Street movement in 2011. The pair decided that because medical debt was so cheap, they could buy it, and forgive it, rather than try to collect on debts that people can't afford to pay. How it works RIP Medical buys portfolios of debt from healthcare systems at a steep discount: It says it can elimi- nate roughly $100 of debt for every $1 donated. "It's because the individuals who owe the debt don't have the means to pay it," said RIP Medical CEO Allison Sesso. "So, while they technically owe it, you can't get blood from a stone, just like you can't get people to pay who don't have the money." That means hospitals are able to reduce some of their bad debt, and patients who qualify get their debt wiped away without any tax consequences or impact to their credit score. Patients whose debt qualifies are within 400% of the federal poverty level and/or have debts that repre- sent 5% or more of their gross annual income. RIP Medical does not disclose how much it pays for debt, but Sesso said it's generally "pennies on the dollar." "We have standard pricing that's based on the for-profit debt market, and so it's designed to be competitive with that," she said. Typically, hospitals attempt to collect debt for a period of time. But a large percentage of bad debt is never collected, and care providers are forced to eat the loss. Some hospitals will let patient debt sit quietly on their books. They may decide to sell it to a for-profit collection agency or continue trying to collect on it. Relieving a burden Trinity Health is the first healthcare system in Connecticut to partner with RIP Medical. The relationship was partly borne out of Trinity Health's charitable mission, said President and CEO Montez Carter. In fiscal 2021, Trinity's three Connecticut hospitals — including St. Francis, Johnson Memorial in Stafford and St. Mary's in Waterbury — reported $54.6 million in uncom- pensated care, including $21.7 million Did you know? • About 20% of U.S. households have medical debt, according to the U.S. Census Bureau. While the median amount owed is $2,000, some medical debts are in the six-figure range. • Medical debt disproportionately impacts Black and Latino families – 27.9% of Black families and 21.7% of Latino families have medical debt, compared to 17.2% of white households, according to the U.S. Census Bureau.

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