This non-profit health system cuts off patients with medical debt
Many hospitals in the United States use aggressive tactics to collect medical debts. They flood local courts with debt collection cases. They garnish patients’ wages. She seize their tax returns.
But a prosperous, not-for-profit health system in the Midwest goes one step further: withholding care from patients who have unpaid medical bills.
Allina Health System, which operates more than 100 hospitals and clinics in Minnesota and Wisconsin and rakes in $4 billion a year in revenue, sometimes rejects patients who are deeply in debt, according to internal documents and interviews with doctors, nurses and patients .
While Allina’s hospitals treat everyone in the emergency room, other services may be shut down for debt-ridden patients, including children and those with chronic illnesses such as diabetes and depression. Patients are not allowed to return until they have paid off their debt in full.
Non-profit hospitals like Allina get huge tax breaks in return for providing care to the poorest people in their communities. But a New York Times investigation last year found that nonprofits have fallen short of their charitable missions over the past few decades, with little consequence.
Allina has an explicit policy of cutting off patients who owe money for services they received at the health system’s 90 clinics. A 12-page document reviewed by The Times instructs Allina staff on how to cancel appointments for patients with at least $4,500 in unpaid debts. The policy shows how to lock down their electronic health records so that employees cannot schedule future appointments.
“These are the poorest patients with the most serious medical problems,” said Matt Hoffman, an Allina primary care physician in Vadnais Heights, Minn. “These are the patients who need our care the most.”
Allina Health said it has a robust financial assistance program that helps more than 12,000 of its 1.9 million patients with medical bills in an average year. The hospital system only cuts off patients if they accrue at least $1,500 in unpaid debts three times. It is contacting them by phone and repeated letters containing information about applying for financial aid, said Conny Bergerson, a spokeswoman for the hospital.
“Allina Health’s goal is and always will be to have zero patients without care for financial reasons,” said Ms. Bergerson. She said cutting services was “rare” but declined to provide information on how often it happens.
Allina suspended its patient lockdown policy in March 2020, at the outbreak of the coronavirus pandemic, before being reinstated in April 2021.
An estimated 100 million Americans have medical debts. Their bills make up about half of all outstanding debt in the country.
About 20 percent of hospitals nationwide have a collection policy that allows them to cancel care, the report said an investigation last year by KFF Health News. Many of them are non-profit organizations. The government does not keep track of how often hospitals withhold care.
Under federal law, hospitals are required to treat anyone who comes to the emergency room, regardless of their financial ability. But the law – the Emergency Medical Treatment and Labor Act – is silent on how health systems should treat patients who need other types of life-saving care, such as those with aggressive cancers or diabetes.
Thanks to its nonprofit status, Allina avoided about $266 million in state, local and federal taxes in 2020, according to the Lown Institute, a think tank that studies health care.
In return, the Internal Revenue Service requires Allina and thousands of other not-for-profit hospital systems to benefit their local communities, including by providing free or less expensive care to low-income patients.
But federal rules don’t dictate how poor a patient must be to qualify for free care. In 2020, Allina spent less than half of 1 percent of her spending on charitable care, well below the national average of about 2 percent for nonprofit hospitals, according to a survey. analysis of hospital financial filings by Ge Bai, a professor at the Johns Hopkins Bloomberg School of Public Health.
Allina is one of Minnesota’s largest health systems and has grown largely through acquisitions. As of 2013, annual profits range from $30 million to $380 million. Last year, it lost money for the first time in a decade, largely due to investment losses.
The financial success has paid off. Allina’s president deserved $3.5 million in 2021, the most recent year for which data is available. The health system recently built a $12 million conference center.
Still, Allina sometimes plays hard with patients. Physicians have become accustomed to seeing electronic health record messages informing them that a patient is “no longer eligible for care” due to “unpaid medical bills.”
Dr. Rita Raverty, a primary care physician who works at an Allina clinic, said the reports were alarming as they meant she was unable to provide continuous care for some of her patients with a number of health risks.
“Nobody wins if patients can’t get preventative care,” said Dr. Raverty. “It makes for worse disease outcomes if you don’t catch things early.”
Doctors and patients described being unable to fill out medical forms required for children to enroll in daycare or present proof of vaccination for school.
Serena Gragert, who worked as a scheduler at an Allina clinic in Minneapolis until 2021, said the computer system simply wouldn’t let her book future appointments for some patients with outstanding balances.
Ms. Gragert and other Allina employees said some of the patients being kicked out had low enough incomes to qualify for Medicaid, the federal state’s insurance program for poor people. That also means that those patients are eligible for free care under Allina’s own financial support policy — something many patients don’t know exists when they seek treatment.
Ms Bergerson, Allina’s spokeswoman, did not dispute that, but said the health system “goes to great lengths to help patients with their financial obligations for medical care.”
Allina employees said the policy has forced them to ration care.
Beth Gunhus, a pediatric nurse, recalled a case where a mother brought in her three children. One of them had scabies, an intensely itchy skin condition caused by mites that burrow into the body. She wanted follow best practices and treat the whole family, who shared a bed in a single room they rented, to make sure it didn’t spread further. But she could only write a prescription for two of the children. The third party’s account was blocked due to unpaid bills.
“There are so many better ways to save money than what we do,” said Ms. Gunhus.
Allina says the policy only applies to debts related to the care provided by her clinics, not her hospitals. But patients said in interviews that they were cut off after going into debt for services they received at Allina’s hospitals.
Because Allina is the dominant health system in some rural parts of Minnesota, patients may have little choice if they are kicked out.
Jennifer Blaido lives in Isanti, a small town outside of Minneapolis, and Allina owns the only hospital there. Ms. Blaido, a mechanic, said she racked up nearly $200,000 in bills after a two-week stay at Allina’s Mercy Hospital in 2009 for complications due to pneumonia, along with several emergency department visits for asthma flare-ups . Ms. Blaido, a mother of four, said most of the hospital stay wasn’t covered by her health insurance and she couldn’t raise enough money to make a dent in debt.
Last year, Ms. Blaido was battling cancer and said she couldn’t get an appointment with a doctor at Mercy Hospital. She had to drive more than an hour to get checked out at a health system that had no connection to Allina.
Allina does not make this policy explicit to patients. It is not mentioned in the health system’s list of “frequently asked questions” about billing practices. In at least one instance, Allina has denied it even existed.
In a lawsuit filed last year in Minnesota state court, Allina sued a couple, Jordan and JoLynda Anderson, for nearly $10,000 in unpaid medical bills.
In court documents, the couple described how Allina canceled Ms. Anderson’s appointments, telling her she couldn’t book new ones until she had three separate payment plans in place – one with the health system and two with the collection agencies.
Even after setting up those payment plans, which totaled $580 per month, the canceled appointments were never reinstated. Allina does not allow patients to return until they have paid the debt in full.
Ms. Anderson recalls being devastated to lose her visit to an endocrinologist who specializes in a chronic condition she has. She had been waiting for the appointment for four months and was unable to get another one.
“It felt like I was being punished, and the punishment was for you to stay sick,” she said.
Ms Bergerson declined to comment on these cases, citing patient privacy.
When the Andersons asked in court for a copy of Allina’s policy to exclude patients with unpaid bills, the hospital’s lawyers replied: unpaid debts.
Allina’s policy, created in 2006, even instructs employees on exactly how to do just that. Among other things, it tells staff to “cancel any future appointments the patient has scheduled at a clinic.”
It offers a few ways that patients can continue to be seen despite their unpaid bills. One is by getting approved for a loan through the hospital. Another is by filing for bankruptcy.
Susan C. Beachy contributed research.