Medical-Debt Blog: Basic Hospital Classifications

It never hurts to understand your adversary. Medical debt relating to unplanned hospital visits can result in the financial dispute of your life. But as in any other collection cases, defenses exist! A little effort goes a long way. The attorneys representing the hospitals will not understand your circumstances better than you.

As consumers, you always have rights. And as defendants in a civil case, you always have the chance to force the plaintiffs to prove their case. The value of medical services—and the extent you explicitly agreed to that value—will be a point of contention. Negotiations and practical solutions can be explored.

Do not roll over if you've been sued for hospital debt. The hospital will sue based on a few well-known claims, all of which can be dissected.

For now, let's take a look at the basic characteristics of hospitals in the United States.

Hospital classifications:

  1. Private, non-profit hospitals:
    1. The structure of most hospitals (two thirds of all urban hospitals in the U.S.)
    2. Many form holding companies, which own and operate profit-making businesses like hotels and restaurants. Because they're non-profit does not mean that their organizers are not making large sums of money off their operations.
    3. Many non-profits make huge profits, calling them "excesses" and spending them on expanded salaries, new construction, and fancy, new high-tech equipment.
    4. Worldwide, most hospitals are run on a non-profit basis by governments or charities.
  1. Proprietary hospitals (for-profit):
    1. Investor owned.
    2. A master parent corporation operates a chain of profit-seeking "franchises" around the nation.
    3. Entrepreneurial ventures motivated by profit.
    4. Comprise of about 15% of all hospitals.
    5. Usually charge about 11% more than non-profits do for the same services.[1] In order to satisfy shareholders and maintain strong profits, these hospitals have been known to over-utilize technology, over-test their patients, and over-price their goods and services.
    6. Have been accused of "crème-skimming by selectively admitting only those patients who can be treated at acceptably high-cost ratios."[2]
    7. The hospital physician staff are usually shareholders often criticized as creating conflicts of interest.
  1. Public hospitals:
    1. Owned by the government and receives government funding.
    2. They usually exist to serve the poor and uninsured.
    3. Usually statutory obligations to fulfill.
    4. Often associated with medical schools.
    5. The largest public hospital system is the NYC Health & Hospitals Corporation.
    6. Some have argued that the increase in uninsured has drained public hospitals to near bankruptcy.[3]

Hospital governance: Three pillars of government.

  1. Board of Trustees
  2. Chief Administrator
  3. Medical Staff

The three competing personality roles often clash over power. Advances in scientific medicine gave rise to Chief Administrator to manage operations. Often, resolution amongst these competing pillars are the result of compromise versus organizational logic.

Hospital inefficiency and spiraling costs are pointed to as substantially contributing to this country's health care crisis.

How many Americans are uninsured:

At least 28.2 million Americans lack health insurance, and are ineligible for financial assistance. The Affordable Care Act decreased that number from 44 million.[4] Most uninsured people are in low-income families and have at least one worker in the family.

Most middle-class and well-to-do Americans have private insurance (although many claim inadequate). Most poor people are covered by Medicaid.

Reasons for being uninsured among uninsured, nonelderly adults, 2016:[5]

  • Cost is too high: 45%
  • Lost or changed employers: 22%
  • Lost Medicaid: 12%
  • Employer does not offer or ineligible coverage: 10%
  • Family status change: 10%
  • "No need" for health coverage: 2%

Feel free to check out this list of 11 Good Medical-Debt Protection Laws in New York. Also, here is an introduction to our medical-debt page.

Much of the above was structured after a wonderful appendix in the back of the top collection-action treatise I have found: NCLC treatise, Collection Actions.[6] It was authored by Alan A. Alop, Defending Hospital Collection Cases (July 2001).



[1] Chicago Tribune, October 10, 1993, at Section 7, page 8.

[2] Health Care Financing review, Spring 1985, at 41.

[3] Higgins, M. (17 August 2005). "Public hospitals decline swiftly". The Washington Times. Retrieved 2007-05-14.

[4] That leaves 44 million Americans who have no health insurance, and are ineligible for financial assistance.

[5] https://www.kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/

[6] Jonathan Sheldon, Carolyn Carter, Collection Actions, Defending Consumers and their Assets, 4th ed., 2017).

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