Hospitals Put Patients' Debt Up for Auction

[Purveyor]

Collection Agencies Bid Online For Right to Recoup Funds; Worries About Tougher Tactics

June 3, 2008

In a move that consumer groups say could increase pressure on people with unpaid medical bills, some hospitals are trying out a new tactic to recoup patients' debts: They're auctioning the debt online.

Hospitals have long relied on outside collection agencies to go after debtors. Under traditional arrangements, these agencies receive a percentage of any money they get from a debtor; the more they collect, the more they earn.

Now, some of the same collection agencies, as well as other firms that purchase debt outright, have begun participating as bidders in online auctions, in which they buy the debt or provide guaranteed payments to hospitals for access to the unpaid accounts. Some experts say this gives them more reason to aggressively pursue patients in arrears. Auctions can drive up the amount paid for debt, meaning a collector must recoup more money from patients to cover its initial investment and turn a profit. And the winning bidders often get to keep all the money they collect on the auctioned debt.

Winning bidders may "have to work harder" to make a profit from auctioned debt, says Michael Klozotsky, an analyst at Kaulkin Ginsberg Co., a collections-industry strategic-advice company. "Working harder means sometimes using strategies that are more aggressive."

Many of the auctions of hospital debt have been done through Web site ARxChange.com -- shorthand for "accounts receivable exchange" -- owned by TriCap Technology Group. Another site is medipent.com, run by Medipent LLC. The auction-site owners, both small companies based in New York, say their systems create safeguards that protect patients from potential abuse. Collection firms are vetted for their tactics and approach to patient needs and concerns before they are allowed to participate in auctions, the site owners say. The site owners also try to ensure that collectors comply with hospital rules -- whether they must record phone calls, for instance, or get the hospital's permission before initiating a lawsuit against a patient. Hospitals have final say over who bids on their accounts, and, on ARxChange.com, don't necessarily award the contract to the highest bidder.

MORE: http://online.wsj.com/public/article/SB121244901525139563-42vy9SStJZjfC9bmu1gePVgkshM_20080702.html?mod=tff_main_tff_top

[NightWatcher]

1. what slime merchants. debt collectors are the lowest of the low

[jojo54]

2. What a lot of people don't understand is

as long as you pay even, $5 a month, there's not a damn thing the hospital accounting office can do. Nor can they "sell" your debt to one of these collection agencies. At least, that's the way it is here in Jersey. Hub had to pay $1100 for ER visit and $600 to the doctor, just for 7 stitches in his thumb. It took awhile, but we paid $25 a month 'till it was done.

[arcadian]

3. Slavery, plain and simple

[lonestarnot]

4. What if the debt was part of a racket by the hospital?

[Turbineguy]

5. Interesting

how many business can be spawned from a fundamentally bad business model.

[izquierdista]

6. That is the crux of the Repub mindset

Enron, collateralized debt obligations, Nick Leeson and Charles Ponzi -- these are the great minds and forward thinkers of the Republican "free market" system. But be careful! If it hauls in a lot of money real quick, Phil Gramm's piggy little snout will be pushing its way to the full end of the trough.

[jmowreader]

7. I have a ridiculous question that simply must be asked

Here's an investment. It's a loan we want you to buy. The person who received the loan hasn't paid anything on it for three years. We're fairly sure he doesn't have a pot to piss in. We did everything except call the Mafia to have it collected on, to no avail.

If you weren't trying to buy tax loss, would you consider this a worthwhile investment?

[Kelvin Mace]

8. These companies

will threaten everything under the sun. They will call you night and day. They will harass you, verbally abuse you. They will call relatives, employers, friends and harass them.

The Fair Credit Act is no longer enforced and they don't care anyway. These people take the debt, add ridiculous collection fees, then hound people to death for the money. They make the Terminator look like Mr. Rogers.

They will take a $2800 debt, add interest and fees, run it up to $8,000, then magnanimously agree to take half that if you sign a contract for that amount. What is really evil is this tactic is used to collect debts that are no longer collectible (over seven years old).

They are merciless and live only to get money out of you.

It is a very profitable line for people with souls.

[SpiralHawk]

9. Republiconomics in action

Profit-making hospitals.
Profit-making prisons.
Profit-making wars.
$4.20 gas.
$5.00 bread.

[Hekate]

10. This is so obscene I have no words for it. My new backup plan for medical disaster is to call my vet

Jesus Christ on a trailer hitch, these people are godless soulless bastards. :cry:

Hekate