On the eastern edge of St. Joseph, Missouri, lies the small city’s only hospital, a landmark of brick and glass. Music from a player piano greets visitors at the main entrance, and inside, the bright hallways seem endless. Long known as Heartland Regional Medical Center, the nonprofit hospital and its system of clinics recently rebranded. Now they’re called Mosaic Life Care, because, their promotional materials say: “We offer much more than health care. We offer life care.”
Two miles away, at the rear of a low-slung building is a key piece of Mosaic—Heartland’s very own for-profit debt collection agency.
When patients receive care at Heartland and don’t or can’t pay, their bills often end up here at Northwest Financial Services. And if those patients don’t meet Northwest’s demands, their debts can make another, final stop: the Buchanan County Courthouse.
From 2009 through 2013, Northwest filed more than 11,000 lawsuits. When it secured a judgment, as it typically did, Northwest was entitled to seize a hefty portion of a debtor’s paycheck. During those years, the company garnished the pay of about 6,000 people and seized at least $12 million—an average of about $2,000 each, according to a ProPublica analysis of state court data.
Many were uninsured Heartland patients who were eligible for financial aid that would have eliminated or drastically cut their bills. Instead, they were charged full price for their care, without the deep discounts negotiated by insurers, according to court records, interviews and data provided by Heartland. No other Missouri hospital sued more of its patients.
Blue collar workers, Walmart cashiers, nursing home aides, clerical staffers—these types of patients have long been the most vulnerable to unexpected debt. They can’t afford insurance, yet they’re not poor enough for Medicaid. Even after the 2010 Affordable Care Act, about 30 million Americans remain uninsured, in part because some states, like Missouri, have not expanded Medicaid to cover more of the poor.
Earlier this year, ProPublica and NPR reported that the wages of millions of U.S. workers are diverted to pay off a variety of consumer debts. Most states, like Missouri, allow creditors to take a quarter of after-tax wages—an amount that government surveys show is unaffordable for lower-income families.
Consumer advocates say the laws governing wage garnishment are outdated and overly punitive, regardless of the debt’s source. But the consequences are especially dire when garnishment is used to collect unavoidable health care bills—with interest and legal fees piled on.
No one tracks how many hospitals sue their patients and how frequently, but ProPublica and NPR found hospitals that routinely did so in Kansas, Oklahoma, Nebraska, and Alabama, as well as Missouri. The number of suits is clearly in the tens of thousands annually. In Missouri alone, hospitals and debt collection firms working for them filed more than 15,000 suits in 2013.
Court records also revealed stark differences in how hospitals within each state pursued patients who couldn’t pay their bills. In Missouri, a handful of hospitals, Heartland foremost among them, accounted for an outsized portion of suits. But many others, including the state’s largest hospital, rarely, if ever, sued.
Heartland’s aggressive tactics aren’t because the hospital is strapped for cash. Despite being based in an economically struggling county of just 90,000, Heartland reported a $45 million profit last year and paid its chief executive $1.2 million, according to its annual report. The hospital declined to discuss Northwest’s finances.
As a nonprofit, Heartland pays no income taxes and no property taxes on the acres of land it owns. In exchange for these tax breaks, it is expected to provide a benefit to the community—most crucially by providing care to lower income patients who can’t afford to pay.
Tama Wagner, the hospital’s chief brand officer, said the hospital does everything it can to fulfill that mission. Patients are offered multiple opportunities to qualify for financial assistance and avoid the possibility of legal action, she said, adding that it’s better for everyone “if we attempt to work on things before it gets to this level.”
But if patients don’t utilize those resources, she said, the hospital must take action. “No one goes into this with the goal or the desire to ruin someone’s life,” she said. “But at the same time, the services were rendered, and we have to figure out how to get them paid for.”
Asked why the hospital sues more patients than any other in the state, Wagner said, “I don’t know.”
Chi Chi Wu, an attorney with the National Consumer Law Center, said Heartland’s tactics ran counter to its mission. Nonprofit hospitals are given tax-exempt status “because they are supposed to be serving the public and especially the poor,” she said.
But if hospitals are charging low-income, uninsured patients “even more and then garnishing their wages on the basis of these inflated amounts,” there ought to be consequences, she said. “They should lose their tax-exempt status.”
The center has recommended that federal regulators prohibit debt collectors from garnishing wages based on the high prices hospitals charge uninsured patients.
In interviews, former patients said they’d run up debts to Heartland mostly because, in an emergency, it’s their only option. They never expected the hospital to seize their wages if they couldn’t pay.
Northwest first sued Keith and Katie Herie when they couldn’t afford the $14,000 bill for Katie’s emergency appendectomy. While Northwest was seizing Keith Heries’ pay for that suit, it sued him again over another hospital visit. Since 2006, the Heries have paid almost $20,000 and still owe at least $26,000, with interest mounting.
ProPublica and NPR shared Herie’s case and other findings with Heartland’s board of trustees, which is now reviewing the hospital’s debt collection practices.
“Make it so people can make a dent in it,” said Herie, 51, a drill operator. “There’s a lot of people who want to be able to pay their medical bills…But they’re not going to jeopardize their household for it.”