A Los Angeles-based company that owns more than a dozen hospitals in four states filed for bankruptcy late Saturday night, the second major system acquired by private equity to collapse in less than a year. Prospect Medical Holdings, Inc., which owns hospitals in California, Pennsylvania, Delaware, and Rhode Island, says that operations will continue “as normal” during the Chapter 11 procedings, but can make no guarantees of the outcomes. Several facilities closed a couple of years ago, leaving areas without health care.
The bankruptcy is very reminicent of the collapse of Steward Health last year, another system which had been acquired by a private equity firm. Private equity firm Leonard Green & Partners controlled a majority stake in Prospect Medical. Exactly like Steward, the Prospect management sold off most of its real estate and buildings to external real estate companies, which then rented the facities back to the hospitals at crippling rates. Despite the fact that this maneuver resulted in an unsustainable situation for every one of the facilities, the management rewarded leadership a $457 million dividend in 2018; the Prospect Medical CEO, Sam Lee, took home about $90 million while Leonard Green shareholders were paid $257 million.
You may have missed the story that almost 25% of hospital emergency rooms are now owned by private equity firms – and are structured to focus on profit rather than health care: Private Equity Gobbles Up Emergency Rooms
While this corrupt procedure is probably technically “legal,” in our opinion it should be against the law and individuals who knowingly cripple health care systems for their own personal enrichment should be jailed.
NC’s first-in-the-nation medical debt forgiveness program — inspired in part by our Debt Jubilee Project – is now being shared with other states that could follow suit. The NC Department of Health and Human Services has created a website with a template that other states can borrow.
Under the plan, hospitals would forgive more than a decade of existing medical debt for eligible residents and work to prevent the accumulation of new debt going forward. Past medical debt that exceeds 5% of a person’s annual income will be relieved. In exchange, hospitals receive higher levels of Medicaid reimbursement under the federal Healthcare Access and Stabilization Program (HASP). Participating hospitals are required to curb aggressive debt collection practices for low-income patients, such as debt sales, excessive interest rates and home foreclosures. Hospitals are required to meet and report on these and other milestones, as well as publicly post debt relief policies.
Several other states has encouraged hospitals to work with Undue Medical Debt, usually using state funds (as Pensylvania did) to purchase the debts at a steep discount through the charity. However, NC’s plan of leveraging HASP funds was a new concept, and proveds the “carrot” to entice hospital systems to sign on.
Did you know that almost a quarter of emergency rooms in the US are now owned by private equity firms? Neither do most people – but it’s true. Sometimes even on the umbrella of a “not-for-profit” system, the emergency care unit must turn a proft or die – and decisions are made not based on health care but on profitability.
Over the last three years, Trinity Moravian Church’s Debt Jubilee Project has worked with Undue Medical Debt to purchase and forgive over $18 million in medical debts owed by our neighbors in central NC. Our campaign went viral and has inspired many similar campaigns all over the country. Most recently, the Debt Jubilee Project helped inspire Governor Cooper and state officials with the DHHS in Raleigh to put together a “first-in-the-nation” program that made it feasible for hospitals forgive past-due medical debts across the board for poorer patients.
But that’s only hospital debt! There are many other kinds of medical debt – physician practices, rehab, tests, etc. We have identified $2 million in qualifying past-due medical debts in central NC that is available on the open market for purchase.
We want to raise $15,000 between December 1st and January 15th to purchase this debt – and abolish it! YOU CAN HELP! Just make your donation here in any amount, and help one of your neighbors find peace of mind and liberty from harassing debt collectors. Probably the amount we raise will go further than the $2 million we have targeted, so any overflow will be used to alleviate debts state-wide.
All donations are fully tax deductible as allowed by law.
We intend to purchase all the medical debt available in these counties:
Alleghany County, North Carolina Cabarrus County, North Carolina Davidson County, North Carolina Davie County, North Carolina Forsyth County, North Carolina Guilford County, North Carolina Montgomery County, North Carolina Randolph County, North Carolina Stanly County, North Carolina Stokes County, North Carolina Surry County, North Carolina Wilkes County, North Carolina
Any overflow will be used to pay medical debts in other counties in NC.
Steward Health Care, which at its height was the largest private hospital system in the US, (with 37 hospitals consisting of almost 8,000 inpatient beds, over 25 urgent care centers, 42 skilled nursing facilities, and a large physician network, in total employing about 42,000 people across the United States and Malta) declared bankruptcy in the midst of controversy after its top leaders took massive payouts.
While hot-button health care issues such as abortion and the Affordable Care Act roil the presidential race, Democrats and Republicans in statehouses around the country have been quietly working together to tackle the nation’s medical debt crisis.
New laws to curb aggressive hospital billing, to expand charity care for lower-income patients, and to rein in debt collectors have been enacted in more than 20 states since 2021.
Democrats championed most measures. But the legislative efforts often passed with Republican support. In a few states, GOP lawmakers led the push to expand patient protections.
“Regardless of their party, regardless of their background … any significant medical procedure can place people into bankruptcy,” Florida House Speaker Paul Renner, a conservative Republican, said in an interview. “This is a real issue.”
Renner, who has shepherded controversial measures to curb abortion rights and expand the death penalty in Florida, this year also led an effort to limit when hospitals could send patients to collections. It garnered unanimous support in the Florida Legislature.
Bipartisan measures in other states have gone further, barring unpaid medical bills from consumer credit reports and restricting medical providers from placing liens on patients’ homes.
About 100 million people in the U.S. are burdened by some form of health care debt, forcing millions to drain savings, take out second mortgages, or cut back on food and other essentials, KFF Health News has found. A quarter of those with debt owed more than $5,000 in 2022.
“Republicans in the legislature seem more open to protecting people from medical debt than from other kinds of debt,” said Marceline White, executive director of Economic Action Maryland, which helped lead efforts in that state to stop medical providers from garnishing the wages of low-income patients. That bill drew unanimous support from Democrats and Republicans
“There seems to be broad agreement that you shouldn’t lose your home or your life savings because you got ill,” White said. “That’s just a basic level of fairness.”
Medical debt remains a more polarizing issue in Washington, where the Biden administration has pushed several efforts to tackle the issue, including a proposed rule by the Consumer Financial Protection Bureau, or CFPB, to bar all medical debt from consumer credit reports.
Vice President Kamala Harris, who is spearheading the administration’s medical debt campaign, has touted the work on the presidential campaign trail while calling for new efforts to retire health care debt for millions of Americans.
Former President Donald Trump doesn’t typically talk about medical debt while stumping. But congressional Republicans have blasted the CFPB proposal, which House Financial Services Committee Chairman Patrick McHenry (R-N.C.) called “regulatory overreach.”
Nevertheless, pollster Michael Perry, who has surveyed Americans extensively about health care, said that conservative voters typically wary of government seem to view medical debt through another lens. “I think they feel it’s so stacked against them that they, as patients, don’t really have a voice,” he said. “The partisan divides we normally see just aren’t there.”
When Arizona consumer advocates put a measure on the ballot in 2022 to cap interest rates on medical debt, 72% of voters backed the initiative.
Similarly, nationwide polls have found more than 80% of Republicans and Democrats back limits on medical debt collections and stronger requirements that hospitals provide financial aid to patients.
Perry surfaced something else that may be driving bipartisan interest in medical debt: growing mistrust as health systems get bigger and act more like major corporations. “Hospitals aren’t what they used to be,” he said. “That is making it clear that profit and greed are driving lots of the decision-making.”
Not every state effort to address medical debt has garnered broad bipartisan support.
When Colorado last year became the first state to bar medical debt from residents’ credit reports, just one Republican lawmaker backed the measure. A Minnesota bill that did the same thing this year passed without a single GOP vote.
But elsewhere, similarly tough measures have sailed through.
A 2024 Illinois bill to bar credit reporting for medical debt passed unanimously in the state Senate and cleared the House of Representatives 109-2. In Rhode Island, not a single GOP lawmaker opposed a credit reporting ban.
And when the California Legislature took up a 2021 bill to require hospitals in the state to provide more financial assistance to patients, it passed 72-0 in the state Assembly and 39-0 in the Senate.
Even some conservative states, such as Oklahoma, have taken steps, albeit more modest. A new law there bars medical providers from pursuing patients for debts if the provider has not publicly posted its prices. The measure, signed by the state’s Republican governor, passed unanimously.
New Mexico state Sen. Steve Neville, a Republican who backed legislation to restrict aggressive collections against low-income patients in that state, said he was simply being pragmatic.
“There was not much advantage to spending a lot of time trying to do collections on indigent patients,” Neville said. “If they don’t have the money, they don’t have the money.” Three of 12 GOP senators supported the measure.
North Carolina state Treasurer Dale Folwell, a Republican who as a state legislator spearheaded a 2012 effort to ban same-sex marriage, said all elected officials, no matter their party, should care about what medical debt is doing to patients.
“It doesn’t matter if, as a conservative, I’m saying these things, or if Bernie Sanders is saying these things,” Folwell said, referencing Vermont’s liberal U.S. senator. “At the end of the day, it should be all our jobs to advocate for the invisible.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.
Republished with permission from KFF Health News.
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On Tuesday, July 23, NC Governor Roy Cooper visited Trinity Moravian Church to learn more about the church’s efforts relieving medical debt through the Debt Jubilee Project. The visit included a roundtable discussion to better understand how recent actions to relieve medical debt could benefit millions of North Carolinians. Roundtable participants included Marisa Clemente, Vice President of Philanthropy at Undue Medical Debt, Jonathan Kappler, chief of staff for N.C. Department of Health and Human Services, and Jordan Montanez, an individual who has benefited from debt relief.
On July 1, Governor Cooper and NCDHHS Secretary Kody Kinsley announced new actions leveraging the state’s Medicaid program that will encourage hospitals to relieve a potential $4 billion in existing medical debt for approximately two million low and middle-income North Carolinians and ease the burden of medical debt in the future. The Centers for Medicare and Medicaid Services signed off July 26 on DHHS’ plan to use the state’s Medicaid program to incentivize hospitals financially. Now NC hospital systems must be convinced to sign on the program – though they will be losing out on higher Medicaid payments if they do not.
The Rev. John Jackman explains how their Debt Jubilee Project works. Photo courtesy of Allison Lee Isley, Winston-Salem Journal.
The Rev. John Jackman, pastor of Trinity and organizer of the Debt Jubilee Project, said that the Governor’s plan was exactly the “carrot” that was neeeded to convince hospital systems to participate. He appealed to faith leaders across the state to educate their parishioners on the issue and encourage them to write hospital CEOs supporting the program. He also indicated that the Debt Jubilee Project will have a link making it easy for individuals to email the hospital CEOs in tehir region. This effort is also supported by the NC Justice Center, which is currently producing a documentary about the issue.
Jordan Montanez, an artist in Greensboro, told her story of an asthma attack and emergency room visit that ended up with a $12,900 bill – unpayable because her condition had caused her to lose her job. Working with DollarFor, she was able to get the bills eliminated — but along the lengthy journey the hospital’s decisions seemed to make no sense. Read Jordan’s story HERE.
Rev. Jackman said that many times, hospitals’ decisions to aggressively collect — or generously eliminate — medical bills are often opaque and arbitrary.
Click HERE to email hospital systems in Forsyth County (Atrium, Novant). Click HERE to email hospital systems statewide.
Hospitals that agree to the proposal will receive higher Medicaid payments than other hospitals. Participating hospitals would:
Relieve all medical debt deemed uncollectible dating back to Jan. 1, 2014, for any individuals not enrolled in Medicaid with incomes at or below at least 350% of the federal poverty level — currently $90,370 for a family of three — or for whom total debt exceeds 5% of annual income;
Relieve all unpaid medical debt dating back to Jan. 1, 2014, for individuals who are enrolled in Medicaid;
Provide discounts on medical bills of between 50% and 100% for patients with incomes at or below 300% federal poverty level, with the amount of the discount varying based on the patient’s income;
Automatically enroll people into financial assistance, known as charity care, by implementing a policy for presumptively determining individuals eligible for financial assistance through a streamlined screening and income validation approach;
Not sell any medical debt for consumers with incomes at or below 300% federal poverty level to debt collectors;
Not report a patient’s debt covered by these policies to a credit reporting agency.
Patients of participating hospitals will not need to take any actions to benefit from medical debt relief.
