Nearly 3.4 million people have signed up for 2023 Affordable Care Act insurance coverage since the start of open enrollment on Nov. 1, a record-setting pace that is a 17% boost over last year, new federal data shows.
The signup data released Tuesday by the Centers for Medicare and Medicaid Services shows a major hike in new signups on HealthCare.gov.
“We are off to a strong start — and we will not rest until we can connect everyone possible to healthcare coverage this enrollment season,” Department of Health and Human Services Secretary Xavier Becerra said in a statement Tuesday.
The nearly 3.4 million in signups represents activity through Nov. 19 on HealthCare.gov, which is used by residents in 33 states to pick an ACA plan, and through Nov. 12 for the 16 states and District of Columbia that run their own marketplaces.
There are 655,000 people who are new to the exchanges that picked a plan already, making up 19% of the total plan signups so far. CMS added that 2.7 million people who already have 2022 coverage renewed or selected a new plan for 2023.
“These plan selection numbers represent a 17% increase in total plan selections over last year,” CMS said in a release.
There is especially major growth on HealthCare.gov, which has seen 493,216 new enrollees compared to 354,137 for the same time period last year.
“Providing quality, affordable health care options remains a top priority,” said CMS Administrator Chiquita Brooks-LaSure in a statement. “The numbers prove that our focus is in the right place.”
The new signups come as the Biden administration made new investments in expansions for marketing and outreach, including record-setting funding for the ACA navigator program. Administration officials are hoping for another robust period of signups thanks to enhanced subsidies to lower insurance costs.
“Four out of five people will be able to find a plan for $10 or less after tax credits,” CMS said.
The boosted tax credits were supposed to expire after this year but have been extended into 2025 by the Inflation Reduction Act.
The 2022 coverage year saw a record 14.5 million signups. The latest open enrollment for HealthCare.gov for 2023 coverage will run through Jan. 15.
Motley earnings numbers from more than a dozen major nonprofit health systems show third-quarter operating incomes landing on both sides of zero, though issues such as labor shortages, limited volume recovery and worsening payer mix look to be a constant across much of the sector.
Baylor Scott & White led the pack with a $257 million operating income for the period ended Sept. 30, 2022, though it was closely followed by Sutter Health’s $244 million.
Baylor is among the outlier systems whose financials have been holding strong through the last few years, and the quarter’s 7.7% operating margin represents a slight improvement over the 7.4% of its 2022 fiscal year (ended June 30). It attributed the quarter’s 5.6% year-over-year (YoY) increase in consolidated total operating revenue to a blend of premium revenue increases, higher surgical volumes and favorable service mix that “returned to and/or exceeded pre-COVID levels.”
Sutter’s operations have been back and forth this year with a $91 million Q1 gain and a $51 million Q2 loss before the most recent quarter’s $244 million. Though it’s still well behind its numbers from last year, the organization’s leadership highlighted the quarter’s relatively flat salaries and progress toward long-term financial resiliency.
“Significant challenges remain, including inflationary pressures, supply chain uncertainties, increased labor costs and staffing shortages, and rising drug prices,” a spokesperson said regarding the numbers. “Our priorities include preparing for seismic infrastructure updates, reinvesting in our communities and supporting our clinicians in service to our mission.”
Topping the other end of the spectrum was Bon Secours Mercy Health and Providence’s respective $141 million and $164 million operating losses—though the latter’s could be viewed as an improvement in light of the $934 million it was down during the prior two quarters.
Both of those systems highlighted a continuation of the inflationary and labor trends that had increased their expenses during the year’s earlier quarters.
Providence, for instance, noted an additional $526 million of agency and overtime expenses during the past nine months in comparison to 2021. Bon Secours Mercy said in its filing that the economic pressures offset improvements to patient volumes that had “approached historical pre-pandemic levels.”
Other operating results of note included: UPMC, whose health services division logged a $103 million operating loss but was buoyed by the integrated system’s insurance services division; Intermountain Healthcare, which is fresh off a merger that helped boost its revenue by 28% and its expenses by 35%; and Advocate Aurora Health, which inched closer to its own pending merger with a narrow 0.2% operating margin.
Regardless of how they stuck the landing, virtually every system reported feeling the continued impact of labor shortages. Banner Health was among that list, reporting a 7% Year after Year increase in year-to-date contract labor costs and noting that understaffing in certain locations negatively impacted capacity and patient volumes.
The reports also suggest some heterogeneity across the patient volume metrics of different markets as demand for non-COVID care continued to recover. Several systems noted their surgical or elective volumes have yet to return to pre-pandemic levels, and some highlighted worsened case mixes that limited year-over-year revenue growth.
Similar to earlier quarters, across-the-board non-operating losses weighed heavily on the organizations’ bottom lines. Nearly every system posted a nine-figure investment loss during the quarter, though a nearly $1.7 billion net investment loss at Kaiser Permanente easily took the cake.
The investment losses led to 11 of the 13 nonprofits to notch a negative net income during the three months ended Sept. 30. See below for a breakdown of the numbers (and note that for systems reporting year-to-date results, third quarter numbers represent the difference between nine-month and six-month totals).
Total Operating Revenues
Total Operating Expenses
Operating Income
Net Income
Kaiser Permanente
24,253
24,328
-75
-1,550
CommonSpirit Health
9,011
8,988
23
-397
Providence
6,866
7,031
-164
-612
UPMC
6,376
6,449
114
-260
Mayo Clinic
4,117
3,960
157
-312
Sutter Health
3,985
3,741
244
103
AdventHealth
3,971
3,910
60
-305
Intermountain Healthcare
3,685
3,685
0
-582
Advocate Aurora Health
3,657
3,649
8
-311
Baylor Scott & White
3,335
3,078
257
135
Banner Health
3,069
3,096
-26
-198
Bon Secours Mercy Health
2,768
2,909
-141
-328
SSM Health
2,330
2,403
-73
-93
Nonprofit Health Systems’ Q3 Earnings ($ millions)
Driven in large part by the growth of Medicare Advantage, a number of startups are vying to create the next value-based care model for senior care in patients’ homes, Axios’ Sarah Pringle reports.
Why it matters: As we recently reported in our Elder Care Crisis Deep Dive, there is a shortfall of enough cash and caregivers to handle the massive amount of aging baby boomers reaching their senior years.
“The cool thing about value-based care?” General Atlantic managing director Robb Vorhoff said. “There’s hundreds of business models.”
Reality check: Scaling remains a challenge for new models looking to shake up the senior care market.
“There are a lot of options out there that you don’t know about,” Town Hall Venture’s Andy Slavitt says. “Some are the best-kept secrets; some are not worth knowing about.”
Be smart: While most elderly adults would prefer to age in place, there is still a need for institutional care settings like nursing homes, which presents its own major challenges, Sarah writes.
A new COVID calamity is hammering China, with a surge in infections prompting a return of lockdowns, including in some manufacturing areas that supply the West.
China reported a record number of infections this week, amid lockdowns and mass testing that are fueling unrest and darkening the country’s economic outlook. Schools in Beijing returned to online teaching.
Why it matters: In addition to the human misery for the world’s most populous country, the effects will be felt around the globe, Axios China author Bethany Allen-Ebrahimian reports from Taipei.
Supply chains are likely to be disrupted, causing prices to rise in an already rocky global economy.
Rare protests broke out today in China’s far western Xinjiang region. Crowds shouted at hazmat-suited guards after a deadly fire triggered anger by prolonged COVID lockdowns, Reuters reports.
“End the lockdown!” shouted protesters in the Xinjiang capital Urumqi, where an apartment fire killed 10.
What’s happening: The moment of truth for China’s zero-COVID policy has finally come.
Either party leaders will need to plunge much of the country into draconian lockdowns, as we saw at the beginning of the pandemic — or they’ll decide it’s time to learn to live with COVID.
Reality check: China’s doctors have warned Xi Jinping that the healthcare system isn’t prepared for the huge outbreak likely to follow the easing of strict anti-COVID measures, the Financial Times reports.
Chinese-made vaccines, which don’t use the mRNA technology employed by many produced by the West, aren’t as effective compared to those made in the U.S. And China has worrisomely low vaccination rates among older people.
But the number of cases in China is actually still very low for anywhere but China.
The big picture: “Zero COVID” restrictions have damaged the economy and undermined people’s trust in government.
That’s a stark about-face from the height of the pandemic. Then, many Chinese people felt the tight central control had protected them better than any other governance model in the world.
But it’s that very model that has plunged China into its current predicament. Xi tied his reputation, and the party’s legitimacy, to the success of “zero COVID.”
Between the lines: Chinese leaders made a huge, politically motivated mistake. They resisted the import of Western-made mRNA vaccines (including Pfizer and Moderna) for its citizens. These vaccines were only recently made available to foreigners.
That’s likely because of Beijing’s big vaccine diplomacy push: Chinese officials touted their own vaccines as the best and safest.
It was politically unpalatable to admit “defeat,” and allow Chinese people to get more effective — but Western-made — jabs.
China is facing an increasingly precarious situation as new COVID cases soar and the population seems to be hitting a breaking point with the government’s stringent zero-tolerance policies.
Why it matters: The world’s most populous nation has massive vulnerabilities heading into this winter, starting with the fact the vast majority of its population has yet to be exposed to the virus and has little ‘natural immunity.’
China’s vaccines didn’t work well compared to those distributed in the West, and the government refused to approve foreign vaccines and doesn’t have a version to combat Omicron.
Vaccine uptake was particularly low among the elderly.
And now, public outrage over new COVID lockdown restrictions has fueled rare protests, Axios’ Herb Scribner writes, with residents demanding the government to lift restrictions quickly and some calling for President Xi Jinping’s resignation.
State of play: Overall, China’s number of reported COVID cases and COVID deaths are far lower than other nations, but there have been recent reported spikes in overall numbers of cases and some new deaths.
It came after the Chinese government announced some easing of its zero-COVID policy, such as reducing mass testing and quarantine requirements, earlier this month.
Reality check: China’s doctors have warned that the health care system isn’t prepared for the huge outbreak likely to follow any easing of public health measures, Axios’ Bethany Allen-Ebrahimian writes.
That includes worries the nation doesn’t have enough ICU bed capacity to handle such outbreaks, according to the Financial Times.
Between the lines: Another concern is the potential evolution of a new, more dangerous variant if there’s a huge surge of infections, Christian Drosten, Germany’s most prominent virologist, told Bloomberg.
“Xi Jinping knows very well that he can’t simply let the virus loose,” Drosten said. “The Chinese population first needs to be as well vaccinated as we are.”
Be smart: China’s officials are scrambling to address the vaccine problem.
For instance, they are launching more aggressive vaccine drives and limiting movement among at-risk groups, including the elderly, the Washington Post reports.
But they have yet to open up the availability of mRNA vaccines from Pfizer-BioNTech and Moderna, opting to focus on their own, per the Post.
The bottom line: China’s zero-COVID policy has kept cases in China relatively low compared to the rest of the world.
But even as the societal and economic consequences of shutdowns become apparent, it faces a very difficult path ahead in unwinding strict public health policies.
The board of trustees at Cleveland-based MetroHealth System has fired President and CEO Akram Boutros, MD.
Dr. Boutros was fired Nov. 21 after the board received findings of a probe into compensation issues involving more than $1.9 million in supplemental bonuses, Vanessa Whiting, chair of the board, said in a statement posted on the health system’s website. The probe found that between 2018 and 2022, Dr. Boutros authorized the compensation for himself, without disclosure to the board.
“We have taken these actions mindfully and deliberately but with sadness and disappointment,” Ms. Whiting said. “We all recognize the wonderful things Dr. Boutros has done for our hospital and for the community. However, we know of no organization permitting its CEO to self-evaluate and determine their entitlement to an additional bonus and at what amount, as Dr. Boutros has done.”
Dr. Boutros took the helm of MetroHealth in 2013. Last year, Dr. Boutros announced his plans to retire at the end of 2022. In September, MetroHealth named Airica Steed, EdD, RN, its next president and CEO. Dr. Steed, who is executive vice president and system COO of Sinai Chicago Health System, will take the helm of MetroHealth Dec. 5, according to Ms. Whiting’s statement. Meanwhile, Nabil Chehade, MD, executive vice president and chief clinical transformation officer at MetroHealth, will assume the CEO’s duties on an interim basis.
Ms. Whiting said MetroHealth discovered the compensation issues related to Dr. Boutros while preparing for the CEO transition, and an internal investigation took place, led by the Tucker Ellis law firm.
She said Dr. Boutros admitted to conducting self-assessments of his performance under specific metrics he established and authorizing payment to himself of more than $1.9 million in supplemental bonuses between 2018 and 2022.
According to Ms. Whiting, Dr. Boutros repaid more than $2.1 million in October, representing the supplemental bonus money paid without board approval for performance in calendar years 2017 through 2021, plus more than $124,000 in interest.
She said the board has also implemented immediate CEO spending and hiring limitations through Dec. 31, 2022, and Dr. Boutros has self-reported to the Ohio Ethics Commission.
MetroHealth’s internal investigation is ongoing.
Among Dr. Boutros’ accomplishments at MetroHealth were helping annual revenue increase from $785 million to more than $1.5 billion; growing the health system’s workforce from 6,200 to nearly 8,000 while seeing employee minimum wage increase to $15 per hour; and developing Ohio’s only Ebola treatment center.
Wall Street’s roil has stabilized somewhat in recent days, with the S&P 500 brushing up against its 200-day moving average and rising more than 10 percent since its October lows, as of publication time.
The index’s 50-day moving average is trending up, according to financial data firm Refinitiv. But it still must climb another 7.4 percent to form a “golden cross,” which is when a stock or index’s short-term moving average rises above one of its longer-term moving averages. The S&P 500’s 20-day and 100-day moving averages are closer to the milestone, only needing increases of 5 percent and 1.2 percent, respectively.
The Dow Jones Industrial Average has already formed a small golden cross: its 20-day moving average is 1.2 percent higher than its 200-day moving average.
Investors Optimistic about Healthcare Sector
– Investors are most optimistic about the Healthcare sector, which is trading close to its 3-year average “price to earnings-per-share” ratio of 48.1x, according to Simply Wall Street.
– Analysts are expecting an annual earnings growth of 13.4 percent, higher than the sector’s past year earnings growth of 5 percent.
– Merck and Johnson & Johnson were among last week’s top gainers driving the market.
Inflation Appears to be Slowing
– The recent lower-than-expected inflation figures could indicate it is slowing.
– The Fed may continue raising rates, considering the strength in recent labor market and retail sales data.
Most experts agree that updated bivalent Covid-19 boosters provide additional protection against serious illness and death among vulnerable populations—but evidence suggests that increased booster uptake may not prevent a “wave of Covid” infections this winter, Apoorva Mandavilli writes for the New York Times.
Can bivalent boosters prevent another surge of infections?
While the Biden administration’s plan to prevent another surge of Covid-19 infections relies on increasing Americans’ uptake of the updated booster doses of the Pfizer–BioNTech and Moderna vaccines, some experts doubt the strategy.
According to John Moore, a virologist at Weill Cornell Medicine, boosters provide additional protection to vulnerable populations—including older adults, immunocompromised individuals, and pregnant people—who should get boosted to prevent severe illness and death.
However, the benefit is not as clear for healthy, younger Americans who “are rarely at risk of severe illness or death from Covid, and at this point most have built immunity through multiple vaccine doses, infections or both,” Mandavilli writes.
“If you’re at medical risk, you should get boosted, or if you’re at psychological risk and worrying yourself to death, go and get boosted,” Moore said. “But don’t believe that will give you some kind of amazing protection against infection, and then go out and party like there’s no tomorrow.”
Separately, Peter Marks, FDA‘s top vaccine regulator, noted the limited data available data for the updated boosters.
“It’s true, we’re not sure how well these vaccines will do yet against preventing symptomatic disease,” he said, especially as the newer variants spread.
However, Marks added, “even modest improvements in vaccine response to the bivalent boosters could have important positive consequences on public health. Given the downside is pretty low here, I think the answer is we really advocate people going out and consider getting that booster.”
How much additional protection do updated shots provide?
While Pfizer-BioNTech and Moderna recently reported that their bivalent boosters produced antibody levels that were four to six times higher than the original vaccine, their results were based on BA.4 and BA.5 antibodies, instead of the more prevalent BQ.1 and BQ.1.1 variants.
According to Mandavilli, “[a] spate of preliminary research suggests that the updated boosters, introduced in September, are only marginally better than the original vaccines at protecting against the newer variants — if at all.”
These small studies have not been reviewed for publication in a journal—but they all came to similar conclusions.
“It’s not likely that any of the vaccines or boosters, no matter how many you get, will provide substantial and sustained protection against acquisition of infection,” said Dan Barouch, head of Beth Israel Deaconess‘ Center for Virology and Vaccine Research, who helped develop Johnson & Johnson‘s vaccine.
Notably, Barouch’s team recently discovered that BQ.1.1 is around seven times more resistant to the body’s immune defenses than BA.5, and 175 times more resistant than the original strain of the coronavirus. “It has the most striking immune escape, and it’s also growing the most rapidly,” he said. BQ.1 will likely follow a similar pattern.
“By now, most Americans have some degree of immunity to the coronavirus, and it does not surprise scientists that the variant that best evades the body’s immune response is likely to outrun its rivals,” Mandavilli writes.
The new vaccine increases antibodies, but the fact it is bivalent may not be significant. In August, a study by Australian immunologists suggested that any kind of booster would offer extra protection. In addition, the study noted that a variant-specific booster would likely not be more effective than the original vaccine.
“The bulk of the benefit is from the provision of a booster dose, irrespective of whether it is a monovalent or bivalent vaccine,” according to the World Health Organization.
Florian Krammer, an immunologist at the Icahn School of Medicine at Mount Sinai, noted that despite recent research, which evaluated immune response soon after vaccination, immune response may improve over time.
“We will see with larger studies and studies at a later time point if there is a good or a significant benefit, but I think it’s certainly not worse,” he added. “I don’t see much risk when you get the vaccine, so you might as well get the benefit.”
“What we need to do right now to get us through the next few months when I think we are in yet another wave of incipient wave of Covid,” Marks added. “And then we need to look forward, and lean into how we’re going to do things differently moving forward.”
Will we see an increase in vaccine uptake?
Currently, FDA allows the booster dose at least two months after a Covid-19 infection or previous does. However, some studies suggest boosting too early could have negative consequences. “Lengthening the interval between boosts to five or six months may be more effective, giving the immune system more time to refine its response,” Mandavilli writes.
Still, “adding yet another shot to the regimen seems unlikely to motivate Americans to opt for the immunization,” no matter the schedule, she adds.
“Each new booster we roll out is going to have a lower and lower uptake, and we’re already pretty close to the floor,” said Gretchen Chapman, an expert in health behavior at Carnegie Mellon University.
Ultimately, “[w]e should not spend a lot of political capital trying to get people to get this bivalent booster, because the benefits are limited,” Chapman added. “It’s more important to get folks who never got the initial vaccine series vaccinated than to get people like me to get their fifth shot.”
Patients at North Carolina-based Atrium Health get what looks like an enticing pitch when they go to the nonprofit hospital system’s website: a payment plan from lender AccessOne. The plans offer “easy ways to make monthly payments” on medical bills, the website says. You don’t need good credit to get a loan. Everyone is approved. Nothing is reported to credit agencies.
In Minnesota, Allina Health encourages its patients to sign up for an account with MedCredit Financial Services to “consolidate your health expenses.” In Southern California, Chino Valley Medical Center, part of the Prime Healthcare chain, touts “promotional financing options with the CareCredit credit card to help you get the care you need, when you need it.”
As Americans are overwhelmed with medical bills, patient financing is now a multibillion-dollar business, with private equity and big banks lined up to cash in when patients and their families can’t pay for care. By one estimate from research firm IBISWorld, profit margins top 29% in the patient financing industry, seven times what is considered a solid hospital margin.
Hospitals and other providers, which historically put their patients in interest-free payment plans, have welcomed the financing, signing contracts with lenders and enrolling patients in financing plans with rosy promises about convenient bills and easy payments.
For patients, the payment plans often mean something more ominous: yet more debt.
Millions of people are paying interest on these plans, on top of what they owe for medical or dental care, an investigation by KHN and NPR shows. Even with lower rates than a traditional credit card, the interest can add hundreds, even thousands of dollars to medical bills and ratchet up financial strains when patients are most vulnerable.
Robin Milcowitz, a Florida woman who found herself enrolled in an AccessOne loan at a Tampa hospital in 2018 after having a hysterectomy for ovarian cancer, said she was appalled by the financing arrangements.
“Hospitals have found yet another way to monetize our illnesses and our need for medical help,” said Milcowitz, a graphic designer. She was charged 11.5% interest — almost three times what she paid for a separate bank loan. “It’s immoral,” she said.
MedCredit’s loans to Allina patients come with 8% interest. Patients enrolled in a CareCredit card from Synchrony, the nation’s leading medical lender, face a nearly 27% interest rate if they fail to pay off their loan during a zero-interest promotional period. The high rate hits about 1 in 5 borrowers, according to the company.
For many patients, financing arrangements can be confusing, resulting in missed payments or higher interest rates than they anticipated. The loans can also deepen inequalities. Lower-income patients without the means to make large monthly payments can face higher interest rates, while wealthier patients able to shoulder bigger monthly bills can secure lower rates.
More fundamentally, pushing people into loans that threaten their financial health runs against medical providers’ first obligation to not harm their patients, said patient advocate Mark Rukavina, program director at the nonprofit Community Catalyst.
“We’re dealing with sick people, scared people, vulnerable people,” Rukavina said. “Dangling a financial services product in front of them when they’re concerned about their care doesn’t seem appropriate.”
Debt upon debt for patients, as finance firms get a cut of payments
Nationwide, about 50 million people — or 1 in 5 adults — are on a financing plan to pay off a medical or dental bill, according to a KFF poll conducted for this project. About a quarter of those borrowers are paying interest, the poll found.
Increasingly, those interest payments are going to financing companies that promise hospitals they will collect more of their medical bills in exchange for a cut.
Hospital officials defend these arrangements, citing the need to offset the cost of offering financing options to patients. Alan Wolf, a spokesperson for the University of North Carolina’s hospital system, said that the system, which reported $5.8 billion in patient revenue last year, had a “responsibility to remain financially stable to assure we can provide care to all regardless of ability to pay.” UNC Health, as it is known, has contracted since 2019 with AccessOne, a private equity-backed company that finances loans for scores of hospital systems across the country.
This partnership has had a substantial impact on patient debt, according to a KHN analysis of billing and contracting records obtained through public records requests.
Most patients in 2019 were in no-interest payment plans
UNC Health, which as a public university system touts its commitment “to serve the people of North Carolina,” had long offered payment plans without interest. And when AccessOne took over the loans in September 2019, most patients were in no-interest plans.
That has steadily shifted as new patients enrolled in one of AccessOne’s plans, several of which have variable interest rates that now charge 13%.
In February 2020, records show, just 9% of UNC patients in an AccessOne plan were in a loan with the highest interest rate. Two years later, 46% were in such a plan. Overall, at any given time more than 100,000 UNC Health patients finance through AccessOne.
The interest can pile on debt. Someone with a $7,000 hospital bill, for example, who enrolls in a five-year financing plan at 13% interest will pay at least $2,500 more to settle that debt.
How a short-term solution ‘leads to longer-term problems’
Rukavina, the patient advocate, said adding this burden on patients makes little sense when medical debt is already creating so much hardship. “It may seem like a short-term solution, but it leads to longer-term problems,” he said. Health care debt has forced millions of Americans to cut back on food, give up their homes, and make other sacrifices, KHN found.
UNC Health disavowed responsibility for the additional debt, saying patients signed up for the higher-interest loans. “Any payment plans above zero-interest terms/conditions in place with AccessOne are in place at the request of the patient,” Wolf said in an email. UNC Health would only provide answers to written questions.
UNC Health’s patients aren’t the only ones getting routed into financing plans that require substantial interest payments.
At Atrium Health, a nonprofit system with roots as Charlotte’s public hospital that reported more than $7.5 billion in revenues last year, as many as half of patients enrolled in an AccessOne loan were in one of the company’s highest-interest plans, according to 2021 billing records analyzed by KHN.
At AU Health, Georgia’s main public university hospital system, billing records obtained by KHN show that two-thirds of patients on an AccessOne plan were paying the highest interest rate as of January.
A finance firm calls such loans ’empathetic patient financing’
AccessOne chief executive Mark Spinner, who in an interview called his firm a “compassionate, empathetic patient financing company,” said the range of interest rates gives patients and medical systems valuable options. “By offering AccessOne, you’re creating a much safer, more mission-aligned way for consumers to pay and help them stay out of medical debt,” he said. “It’s an alternative to lawsuits, legal action, and things like that.”
AccessOne, which doesn’t buy patient debt from hospitals, doesn’t run credit checks on patients to qualify them for loans. Nor will the company report patients who default to credit bureaus. The company also frequently markets the availability of zero-interest loans.
Some patients do qualify for no-interest plans, particularly if they have very low incomes. But the loans aren’t always as generous as company and hospital officials say.
AccessOne borrowers who miss payments can have their accounts returned to the hospital, which can sue them, report them to credit bureaus, or subject them to other collection actions. UNC Health refers unpaid bills to the state revenue department, which can garnish patients’ tax refunds. Atrium’s collections policy allows the hospital system to sue patients.
Because AccessOne borrowers can get low interest rates by making larger monthly payments, this financing system can also deepen inequalities. Someone who can pay $292 a month on a $7,000 hospital bill, for example, could qualify for a two-year, interest-free plan. But a patient who can pay only $159 a month would have to take a five-year plan with 13% interest, according to AccessOne.
“I see wealthier families benefiting,” said one former AccessOne employee, who asked not to be identified because she still works in the financing industry. “Lower-income families that have hardship are likely to end up with a higher overall balance due to the interest.”
Andy Talford, who oversees patient financial services at Moffitt Cancer Center in Tampa, said the hospital contracted with AccessOne to make it easier for patients to manage their medical bills. “Someone out there is helping them keep track of it,” he said.
But patients can get tripped up by the complexities of managing these plans, consumer advocates say. That’s what happened to Milcowitz, the graphic designer in Florida.
Milcowitz, 51, had set up a no-interest payment plan with Moffitt to pay off $3,000 she owed for her hysterectomy in 2017. When the medical center switched her account to AccessOne, however, she began receiving late notices, even as she kept making payments.
Only later did she figure out that AccessOne had set up two accounts, one for the cancer surgery and another for medical appointments. Her payments had been applied only to the surgery account, leaving the other past-due. She then got hit with higher interest rates. “It’s crazy,” she said.
Lenders see a growing business opportunity
While financing plans may mean more headaches and more debt for patients, they’re proving profitable for lenders.
That’s drawn the interest of private equity firms, which have bought several patient financing companies in recent years. Since 2017, AccessOne’s majority owner has been private equity investor Frontier Capital.
Synchrony, which historically marketed its CareCredit cards in patient waiting rooms, is now also inking deals with medical systems to enroll patients in loans when they go online to pay bills.
“They’re like pilot fish eating off the back of the shark,” said Jonathan Bush, a founder of Athenahealth, a health technology company that has developed electronic medical records and billing systems.
As patient bills skyrocket, hospitals face mounting pressure to collect more, which can make financing arrangements seem appealing, industry experts say. But as health systems go into business with lenders, many are reluctant to share details. Only a handful of hospitals contacted by KHN agreed to be interviewed about their contracts and what they mean for patients.
Several public systems, including Atrium and UNC Health, disclosed information only after KHN submitted public records requests. Even then, the two systems redacted key details, including how much they pay AccessOne.
AU Health, which did not redact its contract, pays AccessOne a 6% “servicing fee” on each patient loan the company administers. But like Atrium and UNC Health, AU Health refused to provide any on-the-record interviews.
Other hospital systems were even less transparent. Mercyhealth, a nonprofit with hospitals and clinics in Illinois and Wisconsin that routes its patients to CareCredit, would not discuss its lending practices. “We do not have anyone available for this,” spokesperson Therese Michels said. Allina Health and Prime Healthcare also wouldn’t talk about their patient financing deals.
Bush said there’s a reason so few hospitals want to discuss their financing deals: They’re embarrassed. “It’s like they quietly write someone’s name on a piece of paper and slide it across the table,” he said. “They don’t want to be a part of it because they have in their institutional memory that they are supposed to look after patients’ best interests.”
Some hospitals and banks still offer interest-free help
Not all hospitals expose their patients to extra costs to finance medical bills.
Lake Region Healthcare, a small nonprofit with hospitals and clinics in rural Minnesota that contracts with Missouri-based Commerce Bank, charges no interest or fees on payment plans. That’s a decision that spokesperson Katie Johnson said was made “for the benefit of our patients.”
Even some AccessOne clients such as the University of Kansas Health System shield patients from interest. But as providers look to boost their bottom lines, it’s unclear how long these protections will last. Colette Lasack, who oversees financing for the Kansas system, noted: “There’s a cost associated with that.”
Meanwhile, large national lenders such as Discover Financial Services are looking at the patient financing business.
“I’ve had to become more of a health care marketer,” said Matt Lattman, vice president for personal loans at Discover, which is pitching the loans to people with unexpected medical bills. “In a world where many people are ill prepared to cover their health care costs, the personal loan can provide an opportunity.”
HENRY KOTULA 