In Hospitals Put Patients’ Debt Up for Auction, The Wall Street Journal addresses the practice of hospitals selling the right to collect payments from patients who haven’t paid their bills. Basically, hospitals take old accounts that they’ve given up collecting and sell them to debt collectors. The Journal doesn’t specify the prices paid but it’s probably less than 10 percent of the face amount, in some cases –for debt that’s old and/or has gone through several collection agencies– it’s likely to be much less. Once debt collectors get hold of the debt they “work” it by calling and sending letters to patients. If they want to get aggressive they might report debtors to the credit bureau or try garnishing their wages. The accounts they can’t collect may get sold again.
This phenomenon isn’t particularly new. Other kinds of debts (car loans, cell phones, credit cards) are traded this way, too. I had the chance to study the debt collection industry several years back. It isn’t populated with the kinds of folks you’d want to invite for dinner. Empathy and trust are not words that come to mind.
There isn’t necessarily anything wrong with sending debt out for collection or selling it, but there are troubling aspects, especially for medical debts. Hospital debts don’t feel like real debts to many people. Self-pay patients may be charged higher fees than insurance companies, bills are often wrong and almost always indecipherable. Patients don’t usually get to choose what gets done to them. Imagine going to a car dealership and being forced to buy a particular model and not being told the price. An unpaid hospital bill is really not like an unpaid car payment.
One thing that is new is that with more efficient, automated means of buying the accounts and working them, smaller and smaller debts become worthwhile to try collecting. This can be a hassle for the consumer.
The article lists a number of rights that consumers have under the Fair Debt Collection Practices Act (FDCPA). It’s worth knowing your rights and asserting them. Here are some suggestions for dealing with medical (and other) debt collectors:
- Let them know you are aware of the FDCPA and intend to protect your rights. Then follow through, sending letters to the state attorney general and letting the collector know about it.
- Dispute the debt if you have any concerns about it. The collector can’t collect until they’ve validated the debt. In addition, they may just return the debt to the hospital and get their money back. The hospital may sell it again, but may also just write it off and leave you alone.
- Keep in mind that the debt collector is trying to make a profit. You are not a person to them, just a revenue opportunity. Make them tie up a lot of their time and effort without getting anything out of you and chances are they will leave you alone and pick on someone else