BusinessWeek?s Latest Target is Healthcare Collections

Financial institutions large and small are teaming with medical providers to collect on delinquent patient debt, according to an article in BusinessWeek magazine this week.

General Electric, Capital One, Citigroup and U.S. Bancorp, and several less well known firms are expanding in the medical debt field, according to the “Fresh Pain for the Uninsured” article posted this morning, the publication’s cover story for its upcoming issue. The healthcare providers are seeking to generate some revenue from the unpaid accounts. The collectors typically work the accounts and generate returns by charging interest, according to BusinessWeek.

The article reports that medical providers across the country are targeting consumers defined as “self-pay” that have no health insurance or high deductible plans. A huge bill sends these consumers scrambling to set up a payment plan or into filing for bankruptcy, BusinessWeek reports. Consultant McKinsey & Co. found that U.S. consumers in 2005 made $250 billion in out-of-pocket medical payments, and that total could grow to $420 billion by 2015.

The magazine cites a number of consumers that didn’t know their accounts had been transferred to the third-party financial service firm. Missed payments and high interest rates on the account balance quickly send the total owed into the stratosphere, according to BusinessWeek.

The magazine generated an uproar among buyers of bankrupt debt in an article “Prisoners of Debt” posted online on October 31. Several of the firms in the sector told insdeARM.com that the coverage painted an incomplete portrait of their business (“Industry Counters BusinessWeek ‘Prisoners’ Portrayal” Nov. 16).