Medical debt is the enemy of everyone [PODCAST]

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“Medical debt is the mortal enemy of the patient, the physician, the hospital, the community, the state, and the nation. When we think of others’ debts, we tend to think such debts are their personal responsibility. If they’re unable to pay the debt, it’s their problem. (We make it a You problem, not a Me problem) Society tells us a problem with personal debt is a direct result of bad decisions, poor personal financial habits, profligate spending, living beyond one’s means. We blame those with medical debt for their bad choice of buying substandard health insurance, or else for not purchasing any health insurance at all. We say the consequences of debt are rightly visited on the debtor. Whatever the impact — canceled credit cards, low credit, wage garnishment — it’s on them. Personal responsibility.

Is this true? In the big picture, we individuals and society both bear the costs and burdens of personal “bad debt.” For individuals who fall into arrears in their payments, who cannot pay their financial obligations, unpaid debt means their ability to buy goods and services is curtailed or perhaps ended. If new credit is not extended, the person must live on cash. For any business, any debt that’s not paid by the customer creating it becomes a cost to the enterprise extending credit. The business recoups its loss by raising prices on products or services for all future customers. The business may stop its loss by not providing goods or services to a debtor, disciplining those not paying their bills. In such cases, the consequences of unpaid bills fall on the debtor and creditor, usually ending there.”

Robert E. Goff is a health care consultant and co-author of End Medical Debt: Curing America’s $1 Trillion Unpayable Healthcare Debt.

He shares his story and discusses his KevinMD article, “Medical debt is the enemy of everyone.”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show we have Robert Goff. He is a health care consultant, and he’s the co-author of the book End Medical Debt: Curing America’s One Trillion Dollar Unpayable Health Care Debt. Welcome to the show.

Robert E. Goff: Well, thank you so much for having me. Always pleased to talk about this topic. I’ve spent about 50 years in the health care industry as a hospital administrator, as an administrator of physician organizations, and I’ve done a nice job in terms of increasing their revenue. And yet this is the flip side of that. This is the consequences of, as we’ve raised funds for hospitals, for physicians’ income, we’ve also created in the process a debt burden for the American public.

Kevin Pho: So we’ll get into that book and excerpts in a little bit, but tell me about how you got interested in this over your 50-plus years as a consultant and why this issue is so important to both clinicians and patients.

Robert E. Goff: Well, the sad part is that this is something that is actually getting worse instead of better. We’ve come to the idea that with Obamacare, medical debt would disappear, because there would be coverage for everybody covering everything. It has not happened. If anything, what we’ve done is we’ve created a process where we’ve been taking the burden of health care costs and moving it to the patients through increasing co-pays and deductibles.

If you look at it, the HMO movement did away with deductibles, went to nominal co-pays, which increased the access to physicians. I was involved in the founding of one of the early HMOs, and it was a great way of getting patients into physicians early, so that care could be addressed early on, where it could be dealt with quicker and, quite frankly, cheaper. As insurance costs have gone up, employers have sought to diminish their premium by increasing co-pays and deductibles. That just transfers the burden to the individuals. And with Obamacare, the commercial plans tended to model those products, which have high deductibles, and those high deductibles become a burden on the patient to pay.

But they’ve also done something else. We used to see that the burden of debt and its collection fell to the hospital. Now, because of these high deductibles, it’s falling on the physicians. The HMO movement kind of took the economic consequences of a physician-patient interchange away, and it really left it for when something really happened, which was hospitalization. Now that that’s up front, the physician office is trying to collect deductibles. The average deductible is approaching $2,000. Well, that has had great implications on the financial viability of many a physician practice. So it has diminished the ability of many physicians to stay in private practice, which has then caused them to relocate to areas that perhaps have a higher socioeconomic income or have become employees of hospitals, so that they wouldn’t have to deal with that issue.

Also, of course, what we know is those deductibles and co-pays are keeping people away from the physician because they don’t want to bear the cost. There is a point that I want to make that I think is an important takeaway for clinicians: The confusion over benefits, what’s covered and not covered, is not only keeping people away when they’re sick but is also keeping them away from physicians when they have coverage for things like wellness care, for preventative services. So you’ll see patients who aren’t going when there isn’t a cost exposure.

So guidance that I would be giving physicians is: Reach out to your patients, remind them that they have benefits, and to use those preventative and wellness benefits where there is no deductible applied. Get them into the office so you can try to maintain their health. And so I see a lot of people are avoiding what’s covered to try to avoid the cost of what’s not covered.

Kevin Pho: You mentioned the scenario where private-practice clinician offices have to chase down deductibles from patients, and that can force a lot of these practices to close, go bankrupt, and force these physicians to relocate to hospital-owned systems or more metropolitan areas. Do you have a case study of that scenario taking place, where a physician was forced to relocate because they had to chase down debt and deductibles?

Robert E. Goff: At one point, I operated a physician network of about 2,500 physicians. When I first became involved, 90 percent of the physicians were in independent private practice. By the time of my retirement, we were about 50 percent independent practice. Now, there are a lot of reasons why physicians were leaving private practice, but one of the ones that I would hear in conversations is the economic burden of that up front with the patient became a real issue. So if the patient is coming in and it was a $10, $20 copay, no problem, but now it’s, well, that first bill of $500.

Now, one of the things we learned from a study the U.S. Treasury did is that 47 percent of Americans cannot easily come up with $400 in the event of an emergency. Well, if the average deductible is running close to $2,000, and you can’t come up with $400, and you go to a physician, that bill is going to hit you.

But it’s not just a matter of the dollars involved. It’s a matter of it changed the dynamic between the patient and the physician. Office staffs had to be retrained to really focus in on the economic exchange as well as registering the patient. It used to be, “Oh, what’s your insurance? OK, I see you have a $10 copay.” That’s an easy exchange. Now it’s a matter of the patient coming in fearful of what the bill is going to be, and the office trying: “How do I collect this money?”

What’s not often discussed is, “All right, patient, you’re here. We’re here to take care of you. We know there’s a cost, and we want you to know that we will work with you regarding payment of that bill.” Because the idea that the bill has to be paid in full immediately will scare many a patient away. However, if there can be some discussion about, “We can set up a payment plan, we can pay it over several months,” something to ease that burden, that helps. But it has dramatically changed the communication of that experience of going to the doctor, and I think that has had a major implication for the staff, for the physician, and of course for the patient.

What I find obviously greatly concerning is that there’s a study out that 64 percent of Americans have avoided going to the doctor when ill because of the fear of the cost. And if we’ve learned anything, it’s that delays in obtaining care increase not only the severity but the cost. So we’re kind of going backwards in what we wanted to do. What I liked very much about the concept of the early days of HMOs, with their $2 and $3 copays, is it took that barrier away. It said, “Get in there early, get the relationship going, let the physician become engaged in helping you restore your health early on,” avoiding higher costs later.

Kevin Pho: And you talk, of course, more about this issue in the book that you co-authored. It’s titled End Medical Debt: Curing America’s $1 Trillion Unpayable Health Care Debt. So talk about your book. Talk about some of the main messages that you want to portray, more than you’ve already mentioned.

Robert E. Goff: So this book talks a good deal about the issue and why it’s occurring, in particular what’s happened on the commercial end of insurance. If you look at it, obviously we’ve tried to address the over-65 population with Medicare. Now, unfortunately, there’s a great deal of ignorance on Medicare, because Medicare does not cover 100 percent. If you do not have a supplement, you’re on the line for 20 percent of the cost. That’s something that oftentimes gets forgotten, especially in conversations about Medicare for All. Somehow there’s this belief it covers everything. It doesn’t. Medicaid: We know we’ve tried to take care of the poor through Medicaid.

The working people in America, unfortunately, then are subject to commercial insurance, and this has actually deteriorated in quality over the years. As premiums have gone up, coverage has become more restricted, not only in co-pays and deductibles but also in terms of networks and limitations and requirements on where you can access care. And that’s posed several issues, not only of the patient making sure they understand the system, but also the system looking to exploit out of network to the detriment of the patient for their own economic gain. And so we talk about that quite a bit in the book.

As well as the whole issue of what medical debt means in America. We’re talking about a trillion dollars out there. And the idea of medical debt: Somehow we tend to think of debt in terms of, you buy a TV that you really can’t afford, that’s debt. Well, the worst that happens in that situation, someone repossesses your TV. In health care, we believe that nobody should be deprived. So while an individual has debt, for the individual, that’s bad for them. Being pursued, that’s bad for their credit rating, that’s bad for the idea of coming back for care. But since we will not refuse people care, that debt doesn’t just go away. It stays with the provider.

The provider then has to deal with that. How? Well, they can’t readily increase their rates. Rates in health care are basically fixed. Medicare and Medicaid are set by regulatory authorities. Commercial insurance plans indicate, “Here’s what we’re going to pay.” So where is that debt? Now, on the physician end, if there’s enough of that debt, that physician can’t stay in practice. It is one of the reasons why many physicians don’t locate in the areas that need physicians, because economically there’s an awful lot of that debt out there. They’d rather not be. And many times, in working with physicians, it’s not a matter of them wanting to avoid those communities. It’s a matter of they can’t afford to be in those communities. They can’t afford to have the debt, because they still have to pay rent, they have to pay their employees, they have to buy supplies.

Or that debt is in the hospital. Now, again, we’ve seen hospital closures occurring throughout the country. A good portion of it results from debt that they can’t handle, because again, they can’t raise their rates for Medicare or Medicaid. The only way you can raise rates on commercial is if you’re the only hospital in town and have a monopoly. And the fallacy, of course, with rate increases is it all just ends up translating into higher premiums, which makes employers leave an area, or increase deductibles, or pass on higher payroll deductions. So it’s a self-creating problem that gets worse. We speak a great deal about that issue.

We also speak about the organization that this book and its predecessor created. That’s RIP Medical Debt. RIP Medical Debt is a 501(c)(3). What we do is we acquire consumer medical debt and we abolish it. We raise money and we go through debt buyers. About 45 percent of hospitals actually sell their debt to organizations that give them pennies on the dollar, and then they try to collect the full amount. What we do is we go in and we try to buy that debt and then we abolish it, and we’re able to buy it for pennies on the dollar. Not only that, because of our not-for-profit status, when we abolish debt, it is not a taxable event for the individual.

So what we’ve been trying to do, when we’re trying to get the word out, is that this is an issue. It’s there. Obviously, I would rather see there not be debt. I’d rather see this not occur. I’d like to see the changes in the health care system to avoid the creation of the debt. But it is there. We’re trying to take that burden away. And so far, or to date (we were founded in 2014), we’ve abolished better than $5.5 billion worth of consumer medical debt by going out and purchasing it and then abolishing it.

Now, what we’ve learned from that process is many things. One of them is that there is very little charity care being offered by hospitals. It’s running about 2 percent of their expenses. We also find that when we acquire debt, about 45 percent of that debt that we acquire would have met hospital guidelines for applying for the hospital’s own charity operations, and it’s not applied. Hospitals are not aggressively pursuing charity. They’re aggressively pursuing the debt, but they’re not pursuing the charity.

And so we’ve learned that, and now that becomes something that’s been important for a takeaway: If an individual is feeling economic stress, they should be speaking up about it at the time they see their physician, so they can work with their physician on, “How do I obtain for you that care without exposing you to higher costs?” That may be a greater sensitivity to the issue of network and making sure the patient stays in network. That’s, can we do it on a freestanding basis, using that freestanding imaging center rather than the hospital imaging center, so the cost is lower? Are there programs in the community that the patient can be hooked up with that would help with that expense? And if the patient is at the hospital, say something, because there are charity programs at every hospital that may be able to be applied for to take that burden away.

So I always feel very badly that we’re abolishing things that should have been picked up. But again, as I mentioned before, the experience of the physician’s office and the economics has so changed. We don’t pull that out, where we sit down with the patient and we go over all their medical needs and family situation and the like, but somehow cost, money, doesn’t get raised. And if it got raised, the sensitivity would help keep the costs under control and would help try to keep that burden from being created. So we talked about that a great deal in the book.

We’ve really been thrilled by the amount of support that we’ve received from people, the generosity. It’s allowed us to abolish, and we’re continuing to do so. We have recently received from the Medicare inspector general a formal letter indicating that hospitals should have basically no hesitation to sell their debt directly to us. So we’re trying to reach out to hospitals directly to say, “Before you sell it to the guy who’s going to take that debt, and they’re going to go pound your patients, people in your community, let us take it. Let us analyze. Let us see if they meet charity standards, and then sell it or give it to us so that we can abolish it and avoid them getting on this very abusive collection bandwagon.”

Remember, when you, whether it’s a physician or hospital, turn a bill over to a collector, their goal is to collect on that bill, regardless of what that does to the individual debtor: whether they pay their rent, whether they put new tires on that car, whether they feed their family. They could care less. Their goal is to get that money. The sad part is, once it’s gone to collection, whether it’s the physician or the hospital, they receive only a small percentage back. And many of the people that they’re looking to collect from, these are not people who are trying to hide their money and avoid the responsibility. They can’t pay it. So it’s not a matter of not wanting to. It’s a matter of they can’t. Well, these are not people that we should put in this position to drive down even more.

Now, there are some sad things that come up with people who are receiving medical care. In the cancer area, you find that 55 percent of the people obtaining cancer treatment have medical debt, with about half of that being over $10,000. And a cancer diagnosis means you’re three times more likely to file for personal bankruptcy because of your cancer treatment. I don’t think anybody that’s in the medical profession wants to have that occur: “I survived the illness, but I got destroyed financially. I got killed financially.” I don’t think that’s where we really wanted to be as a society, at least in medical practice. I’ve not met a medical practitioner that has wanted to save the patient and destroy them financially.

Kevin Pho: We’re talking to Robert Goff. He is a health care consultant and co-author of the book End Medical Debt: Curing America’s One Trillion Dollar Unpayable Health Care Debt. Robert, what are some of your take-home messages that you want to leave with the KevinMD audience?

Robert E. Goff: So, as I mentioned before, the physician on the front line has to try that initial reach-out to identify, along with the health status and issues affecting the patient, that economics, so that they can try to reassure them or work with them to keep their cost exposure down.

Secondly, they should be reaching out to their patients to remind them that many of them have benefits in the preventative and routine care area that are not subject to co-payments and deductibles, where they can come in and receive that care. How many women are not getting mammographies, thinking that they’re going to have to pay for it because of a deductible, not realizing that it’s subject to deductible?

The third thing is an understanding that this economic situation is getting worse, not better, as there is great ignorance of what health benefits are and how they’re paid. More people understand how to work their iPhones than they do the basics of their health insurance plan. So people will have to get into the mindset of learning what’s covered and what you have to do to get coverage, to try to avoid being put into those situations.

And I would also say this for medical practitioners, physicians, and hospitals: Work with patients to avoid putting them in these situations. That means greater clarity on whether the emergency department staffing at your hospital is par with the plan or not. And my guidance to every hospital is, I believe they have an obligation to get the radiologists, anesthesiologists, pathologists, ER docs to be in the same health plans the hospital is.

The stories, and we have a number of those in the book, of people who did all the research. There’s a story about this woman who had a very difficult pregnancy. She did all the research, stayed in network, in network, and ended up with a $60,000 bill because the neonatologist, who was an employee of the hospital, wasn’t par with a health plan that the hospital is par with. That’s a terrible position to put a person in, and we have to realize that they shouldn’t be put in those positions. And people in health, I think, have a responsibility to try to avoid, as I said before, saving the patient’s health and destroying them economically.

Kevin Pho: Robert, thank you so much for sharing your time and insight, and thanks again for being on the show.

Robert E. Goff: Kevin, thank you so much for having me.

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