When Area Hospitals Have the Same Owner, Does Medical Debt Go Up?

This transcript was exported on Dec 05, 2024 - view latest version here .

Mark Masselli ( 00:04 ):
America may be the land of free, but patients owe at least $220 billion in medical debt. And experts say
healthcare costs have grown faster than inflation. What if there's an overlooked reason why patients in
some parts of the US have more debt than others?

Breno Braga, PhD ( 00:22 ):
There is strong evidence that areas of the country where you saw an increase in hospital market
concentration, you also see people being less likely to be able to pay the medical that. So with that
shows you that hospital market concentration is related to medical death.

Margaret Flinter ( 00:39 ):
We're talking with two researchers who say that they've uncovered some answers. Fredric Blavin and
Breno Braga are researchers with the think tank Urban Institute.

Fredric Blavin, PhD ( 00:49 ):
In this county, our measure of market concentration increase by over 100%, 113% over this period. And
this was largely due to the fact that two of the four hospitals within this county closed during this
period. And if you look closely at the medical debt in this county, medical debt collections increased by
close to one percentage point among adults over this time period. And just to give you some
perspective, over the same period, the share of adults with medical debt collections nationally declined
by 7.7 percentage points between 2012 and 2022.

Margaret Flinter ( 01:29 ):
This is Conversations on Health Care.

Mark Masselli ( 01:40 ):
Well, let me welcome both of you to Conversations on Health Care. Fred, let's start with you. What is
Urban Institute's changing medical debt landscape tool? And maybe you can tell our listeners how did
you use it to explore the link between hospital market concentrations and people's ability to pay their
healthcare bills on time?

Fredric Blavin, PhD ( 02:01 ):
Yeah, the change in medical debt landscape is an interactive data tool that shows medical debt in
collections reports to credit bureau agencies from 2011 to 2023. It's not all medical debt, it's only debt
that goes to collections. The feature shows data at the national level as well as at the states and county
levels. And you can also explore changes in medical debt among communities of color and
predominantly white communities as well.
( 02:36 ):
The feature also includes data on other factors related to medical debt, such as changes in health
insurance coverage over time, medical debt or hospital mergers and closures that occurred within
specific marketplaces, the prevalence of disability, as well as hospital market concentration. And that's
where we took our latest analysis because we saw some different patterns in market changes and
market concentration potentially related to medical debt as well, which motivated us for our analysis
that looked at the link between medical debt and market concentration.

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

Margaret Flinter ( 03:17 ):
Well, Breno, there's a lot there for us to understand. I'm so glad we have you to help us tease this out. I
think you've noted that in 2017, 90% of hospital markets in the US were highly concentrated. Seems
challenging that you could go higher than 90% on anything in this country. But since then, hospital
market concentration, I understand, has only grown. Can you tell us what does this mean? It seems like
it should be obvious, but it's not obvious to me how you define market concentration when it comes to
hospitals.

Breno Braga, PhD ( 03:50 ):
Sure. In economics, market concentration measures how competitive a market is, so that is when a
small number of firms dominate a market. So typically markets with a high concentration, they have
undesirable consequences for consumers such as higher prices. And particularly in our study, we use
something called the Herfindahl-Hirschman Index, the HHI, which measures the number of hospitals and
the size of those hospitals in a particular hospital market area.
( 04:18 ):
So let's say if you are in an area like Montgomery County, Maryland and you have just one or two
hospitals there and they serve most of the population, that's considered an area that is highly
concentrated in terms of their market, which probably has undesirable consequences for the
consumers.

Mark Masselli ( 04:39 ):
Fred, we're a big country and I'm wondering is $220 billion a lot? It seems like a lot. What's the run rate
been on medical debt over the last decade? And I think people would be interested in having some
larger perspective on this.

Fredric Blavin, PhD ( 04:59 ):
Right. So in the data tool, we showed that in 2013, for example, 19.5% of consumers in the US had some
form of medical debt in collections. Now, this declined quite a bit over time. By 2023, 5% had medical
debt in collections, but this is largely due to some voluntary changes from the credit bureaus in 2022
and 2023 where they, for example, removed medical collections under $500 from consumer credit
reports.
( 05:33 ):
And so that's not the underlying debt that consumers have, that's just the amount that they have in
collections. More recent survey data indicates that roughly four out of 10 adults in the United States
have any medical or dental bill past due. That gives you a sense really of what the scope is in terms of
how many consumers have medical debt within the country.

Margaret Flinter ( 05:59 ):
Well, Breno, the American Hospital Association says that medical debt is tied to inadequate healthcare
coverage and high deductible health plans that intentionally push more costs onto patients. And
certainly high deductible health plans are very, very attractive in many organizations. But it says most
hospitals provide free care for patients with the most limited means, defined as income below 200% of
the federal poverty level. What's your response to that?

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

Breno Braga, PhD ( 06:30 ):
Well, it's an interesting statement. I'll say the first part of this statement is backed by research. So there
is strong evidence that being uninsured is a stronger predictor of having medical debt. So if you just look
at the map of the country and you're going to see that the areas where there is the highest share of the
population with medical debt, those are the areas where people are less likely to have health insurance
as well. There is also a couple of studies out there showing the causal evidence that states that
expanded Medicaid.
( 07:02 ):
If you look at those states one or two years after the expansion, you see a reduction in medical debt in
those states. So definitely having health insurance is important. Even though it's important, it might be
not enough. So there's also data from the census showing that among all the households in the country
where everybody in the household has health insurance, so everybody's covered by health insurance,
16% of those households have medical that.
( 07:28 ):
So meaning especially for this middle and low income households, having health insurance might not be
enough. And the reason is, as you probably know, the increasing in deductibles, co-payment, co-
insurance are making hard and harder for even folks with health insurance to pay their medical bills. So
the first part of this statement, I think it's backed by research.
( 07:54 ):
The second part of this statement, I don't know if it is, so it's actually there is some study out there
showing that if you look at all the nonprofit hospitals in the country, for 86% of those nonprofit
hospitals, the amount of benefit they receive in terms of tax exemption is greater than the amount of
charity care they provide. So if you're a nonprofit hospital, you don't have to pay as much taxes as a for-
profit hospital, as a for-profit firm.
( 08:23 ):
So you get those benefits of paying less tax. So for 86% of these nonprofit hospitals, the amount of
benefit they receive is not enough compared to the amount of charity care they provide. So we think
that hospitals, especially the nonprofit hospitals, could be doing a little bit more to address this issue.

Mark Masselli ( 08:42 ):
Fred, you proposed a number of policy solutions, and you want to implement more stringent
requirements on nonprofit hospitals. And you want the IRS to specify a stricter dollar amount for charity
care and community benefits. I take it these are administrative actions that really require an
administration to embrace them. Or am I wrong on that? What's the likelihood of getting those
through? Or are there other strategies to implement them and maybe walk through what your
proposals would do at the same time?

Fredric Blavin, PhD ( 09:17 ):
We're not advocating for one policy or another necessarily. We just mentioned some potential policies
that could address the medical debt problem. On the stricter enforcement of charity care community
benefits, as Breno mentioned, federal law requires that nonprofit hospitals provide some level of charity
care for a condition of receiving a tax-exempt status.
( 09:41 ):

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

There's also federal law related to community benefits and more generally in terms of hospitals having
to establish financial assistance policies and determine if patients qualify for charity care before
engaging in extraordinary collection actions. But these laws are generally poorly enforced. Their effects
on charity care spending and extraordinary collection actions are limited based on what we can tell from
the most recent research in this area.
( 10:12 ):
And they also don't extend to for-profit hospitals and non-hospital providers. In terms of thinking about
this with Republicans controlling the House and Senate and the presidency, it seems unlikely that there's
going to be a stricter regulation within this area.
( 10:32 ):
I think, if anything, you're seeing a lot of proposals on the right coming out of the Trump campaign and
coming out of the Republican National Committee related to, if anything, stripping back say Medicaid
benefits in terms of potentially making cuts to the federal matching rate for the Medicaid expansion
population or making other cuts to what's called the FMAP percentage in terms of what the federal
government pays for Medicaid.
( 10:59 ):
And I think this could have potential adverse consequences for consumers, especially low-income
patients who rely on Medicaid. Seven states actually have trigger laws where if there are any potential
cuts to the federal match on the expansion population, they can get out of their Medicaid expansion.
And so there are potential other kind of changes that we can expect politically that could have adverse
effects for consumers and medical debt.

Margaret Flinter ( 11:29 ):
Well, that is certainly something I'll add to my list of things that we can worry about over these coming
weeks and months. But I also want to ask this question, Breno, maybe I think you've noted you want
better enforcement of antitrust laws to promote a more competitive healthcare marketplace. And I'm
wondering how realistic is this today? The Federal Trade Commission's been fairly weak historically in
this regard. And of course, how realistic is it, do you think, going forward?

Breno Braga, PhD ( 12:01 ):
Yeah, that's a good question. So I think our goal here and what we do is to try to show the facts to
people and policymakers and they can make the best decisions they can. So there is strong evidence
that areas of the country where you saw an increase in hospital market concentration, you also see
people being less likely to be able to pay the medical debt.
( 12:22 ):
With that shows you that hospital market concentration is related to medical debt. If the goal of
policymakers is to help those folks to pay those bills, we have to think more about making those market
more competitive. So one thing we always like to mention is now only big mergers and acquisitions
needs to be reviewed by the Federal Trade Commission and the DOJ.
( 12:48 ):
So if you live in an area, there's just two small hospitals that are merging, those mergers, they don't
have to be reviewed in advance. So this is something that you can decrease the threshold for the size of
the mergers and acquisitions that need to be reviewed by the Federal Trade Commission or the DOJ. The

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

other thing that I think it relates to what we've been discussing now is that nonprofit hospitals are not
subject to review by the Federal Trade Commission because they're nonprofit hospitals.
( 13:18 ):
But as Fred and I mentioned before, a lot of these nonprofit hospitals are behaving exactly like for-profit
hospitals. So they might have anticompetitive behaviors as the nonprofit hospital. So maybe the Federal
Trade Commission should also... We should think about ways for the Federal Trade Commission to also
review the behavior of those hospitals.

Mark Masselli ( 13:39 ):
Maybe to both of you, we're seeing certainly the Federal Trade Commission recently held a hearing on
private equity in hospitals. And I'm wondering how are those reviewed? Are they under the regulatory
framework of the FTC and what have been the implications? I don't know if you've teased out in your
study of those hospitals that are for-profit and have private equity. What can you tell our listeners about
the impact that private equity is having and maybe how it rolls up in terms of total medical debt as well?

Fredric Blavin, PhD ( 14:20 ):
So unfortunately, we can't tease that out within our data in terms of private equity ownership within the
hospitals that we have in our study. I think that is an area that is ripe for research in terms of what are
the implications of private equity in terms of medical debt, in terms whether or not providers that are
acquired through private equity are more aggressive in pursuing medical debt from patients upon
acquisition or not. But that's something that we can't really dive into within our data.

Margaret Flinter ( 14:54 ):
You're doing a great job of making some formally of two things clear, so we're just going to keep going
with this. And Fred, I think you're calling for reducing incentives for consolidation. One way to approach
the problem by changing the Medicare payment schedule. And you've pointed out that there's
differences in the schedule when we compare hospital outpatient departments, for instance, to a
physician's office. And yup, that seems obvious, but unpack for us what's going on here, what's the
consequences, and why would this reduce the incentive for consolidation.

Fredric Blavin, PhD ( 15:27 ):
Right, so this gets to the issue of site neutral payment reform. So as you mentioned, Medicare pays for
services provided in hospital outpatient departments at higher rates than in ambulatory surgical centers
or within a physician offices. So MedPAC and others have done a lot of research indicating that if you
look at services that are similar, that can be conducted quite easily across all these three settings, that
there's really no difference in the quality of care provided within one setting versus another, and that
there are significantly higher payments within these hospital outpatient departments.
( 16:08 ):
This is one potential driver in of itself of higher costs within the healthcare system within the Medicare
program. So proponents of site-based payment reform argue that these payments based on site of
service have led to an increase in the number of services provided in these higher costs hospital
outpatient departments, and also encourage further consolidation where hospitals have an incentive to
consolidate and purchase or acquire hospital or physician practices.
( 16:42 ):

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

And since they're able to get higher reimbursement rates for services provided within those hospital
outpatient departments, this further drives up healthcare spending within the Medicare program, and
there's really no evidence out there indicating that this has a quality improving effect among patients.

Mark Masselli ( 17:02 ):
Breno, let's pull the thread a little on what Fred just said there, because you want to prevent hospital
closures to avoid higher market concentrations. And I'm wondering what the strategy is here. Are you
proposing a provider relief fund similar to we had during Medicaid or during COVID? What's your
thinking here?

Breno Braga, PhD ( 17:26 ):
Yeah, so when people think about market concentration, they often think about mergers and
acquisitions. But another way that the market gets more concentrated, it's when a hospital close. So
think about this, if you have four hospitals in your market area and then one of them closes, the other
three hospitals...

Mark Masselli ( 17:43 ):
Is that a big thing that's happening around the country? Are these more rural hospitals or are these
urban?

Breno Braga, PhD ( 17:50 ):
It's actually both. There is the impression that most of the hospital closures are rural, but that's not true.
There is a lot of hospital closures in urban areas as well. But we have strong evidence showing that areas
where experience a hospital closure, you see an increase in medical debt a couple of years later. And
then one way that that happens is through market concentration.
( 18:11 ):
So people have less options to go and the remaining hospitals can charge higher prices from patients.
We also can think that hospitals that remain, they can be more aggressive in terms of collecting the debt
too because there is less competition. But also one thing that people usually don't think about is if you
have less options near you, you might wait longer to seek treatment for a cancer or something else.
( 18:35 ):
And if this treatment is more complex, probably the bill that you're going to have is going to be more
expensive as well. So just the fact that you have less options near you might mean that you're going to
have a worse health outcome. And then as a result of that, you're going to have more medical bills to
pay.

Fredric Blavin, PhD ( 18:52 ):
And adding one thing to that, there's an example in our changing medical debt landscape tool of a
specific county. So if you look at Delaware County within the tool, this was a county that experienced
some of the greatest increases in hospital market concentration between 2012 and 2022. In this county,
our measure of market concentration increased by over 100%, 113% over this period.
( 19:22 ):
And this was largely due to the fact that two of the four hospitals within this county closed during this
period. And if you look closely at the medical debt in this county, medical debt collections increased by

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

close to one percentage point among adults over this time period. And just to give you some
perspective, over the same period, the share of adults with medical debt and collections nationally
declined by 7.7 percentage points between 2012 and 2022.
( 19:54 ):
So this gives a bit of an example of how you can see how a hospital closure could affect market
concentration within the county and could ultimately have some effect on medical debt collections.

Margaret Flinter ( 20:07 ):
Well, I wonder, and either of you could answer this, but it really comes from your prior comments,
certainly the impact on consolidation and on debt is clear, but we're also looking at some very real
outcomes on people's lives. And particularly I think what we're seeing in many states is a reduction in
access to maternity care, at the same time that mortality and morbidity rates in pregnancy are going up.
( 20:36 ):
And as hospitals consolidate particularly in rural areas, I don't know as much if this is happening in the
urban areas, closing the maternity obstetrical service seems to be a first action. States are responding
with things like mobile health units, community health centers are responding. But what's the level of
oversight that's going on related to these consolidations about essential services like maternity? Do you
all look at that as part of your calculus about the economic impact?

Fredric Blavin, PhD ( 21:05 ):
Not in this study, but this is something that we've worked on, I've worked on with other researchers as
well in terms of responses to a hospital closure, specifically the example of a closure of a maternity care
ward. This is a huge issue, especially in rural areas where there's more distance between consumers and
their healthcare providers. So when you have a closure of a maternity care ward, that could significantly
increase the driving distance to your nearest hospital.
( 21:35 ):
And so this is a very large concern in terms of access to care and potential health outcomes. There's
already a lot of research out there indicating that when a hospital closes, particularly in rural areas, that
increase in distance and driving time to the nearest emergency room and hospital really has effects on
patient's health and risk of mortality as well. So this is something that is something to carefully look out
for and is a concern particularly for rural markets across the US.

Mark Masselli ( 22:09 ):
Let me just expand a little from that one niche of maternity and ask or maybe get on your wish list for
things we'd like you to study, the impact on primary care. So when hospitals are buying primary care
practices and making them part of the hospital, it drives more of the encounters to be built by the
hospital versus the freestanding primary care provider. And we are advocates for expanding primary
care.
( 22:38 ):
Very worried about these private equity hospital-owned health systems coming up and it's squeezing
out primary care. So how did you tease out the impact or were you able to look at where there's a
robust primary healthcare system and less reliance on the ED or the hospital-based or controlled
primary care providers and those who were independent? Any light that you could shed on that or is
that for the next study coming up?

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

Fredric Blavin, PhD ( 23:10 ):
For this study, this is something that we didn't get to in the study. I think the study that we're primarily
discussing today is looking at that link between market concentration and medical debt collections. And
that is within our medical debt data, we just know it's medical debt. We don't know the source of the
medical debt in terms of the specific provider or provider type.
( 23:35 ):
And we're looking at hospital data where we're... In terms of coming up with our measure of market
concentration, that is just based on adjusted missions within a health system within a given market. So
that's not something we've teased out with this study, but it is definitely something that is ripe for
future research.

Margaret Flinter ( 23:54 ):
We look forward to that. And I'd like to ask you to maybe share with our listeners some perhaps vivid
examples of how this plays out in communities. Fred, you note that about 27 million consumers had
debt in collections on their credit card reports in 2022, but disproportionately communities of color and
people living in the South in the United States were disproportionately affected. Can you give us an
example of where this is playing out in one community as an exemplar?

Fredric Blavin, PhD ( 24:26 ):
I mentioned the one example in Delaware County. I think that is a good example specific to medical debt
collections. But you are right in that most of medical communities with high medical debt are
concentrated in the South and they're concentrating in states that have not expanded Medicaid so far.
And so in another study that we looked at, we looked at what county characteristics are associated with
higher levels of medical debt.
( 24:59 ):
So Medicaid expansion is a big piece, geographic location as well, which is highly related to Medicaid
expansion decisions, and also the health of communities. So we found that counties that have simply
worse health status based on average number of chronic conditions and prevalence of disability within
the communities, that is the largest factor in determining whether or not determining high medical debt
within that community.
( 25:30 ):
The underlying health of a community, sometimes we don't necessarily think about this, but ultimately,
the worst health that you're in, the more likely you are to encounter the healthcare system, the more
likely you are to accrue medical debt over time. So that is one of the largest predictors of medical debt
within our country.
( 25:50 ):
In our medical debt tool, you can see that states that had the largest decline in medical debt following
the voluntary changes by the credit bureau agencies to remove medical debt under $500 from the credit
reports, those were concentrated in the South as well. So I think the top five states that were most
affected by this policy were West Virginia, South Carolina, Oklahoma, Louisiana, and Mississippi.
( 26:17 ):
Right now, the states that have the lowest levels of medical debt and collections are Colorado, but they
have instituted state policy that removed all medical debt and collections for consumers within that

Transcript by Rev.com

This transcript was exported on Dec 05, 2024 - view latest version here .

state, as well as Minnesota, Hawaii, Vermont, and Washington all have very low levels of medical debt,
under about 2% of consumers within the states.

Margaret Flinter ( 26:40 ):
Very, very, very intentional and a result of progressive legislative changes. Thank you for calling those
out.

Mark Masselli ( 26:46 ):
Maybe you could just take a minute to talk a little bit about, either one of you, the Urban Institute,
founded in 1968 by President Lyndon Johnson. Tell our listeners a little more about the size and the
scope and the focus of the institute.

Fredric Blavin, PhD ( 27:02 ):
The Urban Institute has I believe around 500, maybe more than 500 employees, and we have research
covering various social and economic policy areas. I'm a principal researcher in the health policy center.
Breno's a researcher in labor and human policy. We also have a joint tax policy center with the
Brookings Institution, an education policy center, a Metro Policy Center, which focuses a lot on housing
related issues within the US.
( 27:40 ):
We are a fairly large organization with a lot of capabilities in analyzing the effects of policies, forecasting
the effects of various policies as well. And so we have a lot of capabilities in terms of what would be the
likely effects of... In the healthcare space specifically, we've done a lot of work on forecasting what
would be the effects of repealing the Affordable Care Act on healthcare costs and healthcare coverage
within the US, and done a lot of work on know pre-ACA implementation on writing about the
anticipated effects of those policies as well. Breno, anything else you want to add?

Breno Braga, PhD ( 28:20 ):
Yeah, I just want to add, we're a non-profit, non-partisan research organization. Our goal is to provide
the public with the best statistics, the best facts, and help people to make the best decisions for
themselves and also policymakers and other stakeholders to make best decisions.

Margaret Flinter ( 28:38 ):
Well, thank you for joining us, Fredric Blavin and Breno Braga from the Urban Institute. And thanks to
our audience for being here. Just a reminder to be sure and subscribe to our videos on YouTube. Find us
on Facebook and X with our account name, CHCRADIO. And as always, you can go online to
CHCRADIO.com to sign up for our email updates. And please, you can also share your thoughts and your
comments about this program with us. Take care. Be well.
( 29:05 ):
This copyrighted program is produced by Conversations on Health Care and cannot be reproduced or
retransmitted in whole or in part without the expressed written consent from Community Health
Center, Inc. The views expressed by guests are their own, and they do not necessarily reflect the opinion
of Conversations on Health Care or its affiliated entities.

Transcript by Rev.com