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Nonprofit hospitals act as medical debt litigators

Hospital invoice
Illustration: Aïda Amer/Axios

Tax-exempt hospitals are again raising eyebrows over how they harass patients, often the poorest, in court by trying to recoup medical debts.

Driving the news: ProPublica and MLK50 published a deep dive yesterday on Methodist Le Bonheur Healthcare, a $2 billion not-for-profit and faith-based hospital system in Tennessee that has filed more than 8,300 lawsuits against patients over the past 5 years.

  • One of the patients featured in the story made less than $14,000 last year, and Methodist is suing her for more than $33,000. The hospital operates in the second-poorest large metropolitan area in the nation.
  • Methodist obtained wage garnishment orders in almost half of the cases it filed between 2014 and 2018, meaning that the debtor's employer was required to send the court a portion of the worker's after-tax income.

Between the lines: As we wrote this week, hospitals taking patients to court is both common and longstanding.

The bottom line: Not-for-profit hospitals market themselves as charities, but they act more like for-profit peers — renewing questions of whether those organizations’ tax exemptions are justified.

  • Coincidentally, the American Hospital Association released a paper Thursday touting hospitals' community benefits, but the paper has some of the same flaws as prior analyses.

What we're watching: These practices have drawn the ire of Sen. Chuck Grassley, who is now chairman of the powerful Finance Committee.

  • "Such hospitals seem to forget that tax exemption is a privilege, not a right. In addition to withholding financial assistance to low-income patients, they give top executives salaries on par with their for-profit counterparts," Grassley wrote in a 2017 op-ed.

Go deeper: Hospitals are swimming in cash