Nonprofit hospitals are most likely to sue patients for payment compared to their for-profit competition. According to research published in the Journal of the American Medical Association, garnishments were more likely among nonprofit than for-profit hospitals and hospitals with a higher markup ratio relative to the Medicare allowable amount.
And, they are suing to grab 0.1 percent of their total revenue.
The study was conducted of hospitals in Virginia. Five hospitals (four nonprofit and one for-profit) accounted for 51 percent of all garnishment cases in the state. According to federal statistics, 62 percent of U.S. hospitals are nonprofit.
An estimated 20 percent of Americans had medical debt in collections in 2014, according to the research. Such debt has been increasing with direct patient billing, rising insurance deductibles, and more out-of-network care being delivered, even at in-network facilities, according to researchers William E. Bruhn, Lainie Rutkow and Peiqi Wang.
Some hospitals have started using aggressive tactics that include suing patients and garnishing their wages or bank savings.
The researchers found 20,054 warrant-in-debt lawsuits and 9,232 garnishment cases in 2017. Garnishing was conducted by 48 of 135 Virginia hospitals (36 percent), of which 71 percent were nonprofit and 75 percent urban, compared with 53 percent nonprofit and 91 percent urban among hospitals that did not garnish.
The mean annual gross revenue of garnishing hospitals was $806 million and the mean amount garnished per hospital was $722,342 (0.1 percent of gross revenue). The mean amount garnished per patient was $2,783.15 (range, $24.80-$25, 000). The mean number of garnishments per hospital was 82, and 8,399 patients had wages garnished.
The most common employers of those having wages garnished were Walmart, Wells Fargo, Amazon, and Lowes, according to the researchers.