Editor's Corner: John Oliver's medical debt investigation raises questions about hospital business practices

John Oliver's HBO show "Last Week Tonight" has raised comedy to a mixture of guerrilla politics and performance art by undertaking real-life actions to reinforce its overall message. "Last Week Tonight" has founded a fake church, created a new mascot for the tobacco industry  and even sold front row tickets at Yankee stadium for 25 cents apiece to defeat the team's elitist marketing tactics.

Late last week, Oliver gave thousands of Americans some peace of mind that their past health problems won't plague them for years to come in the form of harassing lawsuits or phone calls from bill collectors. I'll get to how shortly.

One of the component's of Oliver's weekly show is an in-depth investigation into the social, political and commercial issues troubling America. His most recent installment was on the debt buying and collection business. It has a ridiculously low bar of entry--"Last Week Tonight" incorporated such a company online in Mississippi for only $50. In many states, there is no license required to collect debts.

Among the most disturbing tactics of these debt-buying firms is to sue individual debtors--even if they have already had their debt dismissed through bankruptcy or barred by the statute of limitations. Those companies bet the defendants won't show up in court, allowing them to win by default. These debt-buying firms can then legally garnish the debtors' wages to satisfy the judgment. 

Oliver noted on his show that not long after incorporating Central Asset Recovery Professionals (CARP, after the bottom-feeding fish), it was approached by a Texas firm willing to sell it $14.9 million in uncollected medical debt for about $60,000, or about one-half penny on the dollar.

No big surprise that there are companies selling huge packages of medical debt: It's by far the leading cause of bankruptcy in the U.S. And as I've detailed many, many times over the years, patients are regularly haunted and hounded over their inability to pay bills.

CARP accepted the Texas debt-seller's offer.  And though he could have legally started harassing people over medical debt they no longer had to pay, instead Oliver retired the debt in a faux ceremony. 

Oliver engaged in this staged absurdity mostly out of humane reasons, but also because he wanted to eclipse the biggest dollar-value giveaway in TV history–Oprah Winfrey's handing out of new cars to every member of the audience of her show in 2004. That was valued at around $8 million.

He is to be commended not only for making a political and comedic point, but providing relief to some 9,000 medical debtors.

However, the institutions that got them in that position in the first place have some questions to answer. Among them:

  • Presumably, many of these debts were held by non-profit hospitals and affiliated providers (I asked an HBO spokesperson about this, but did not receive an answer by my deadline). If they couldn't collect, why did they sell these debts in the first place?

  • Oliver noted that the debt that was purchased included the addresses and Social Security numbers of the debtors--an aggregate of "too much information" that seemed personally unsettling to him. Such data would be considered confidential patient health information under HIPAA, and providers are obligated to protect it. But apparently these providers had no problem selling that information to a front corporation for a television show for a fraction of a cent, or at least selling them to an entity that had no compunction reselling that debt under such suspicious circumstances.

  • How does selling the medical debt of their patients to entities that may hound those patients for years--even after they're not legally entitled to collect such debt--square with the community mission of a typical not-for-profit hospital?

Of course, it's no secret that not-for-profit hospitals have their own bare-knuckled ways of collecting from patients. There's Mosaic of Life Care in Missouri, which created a for-profit subsidiary to collect debts and even sue patients--a practice it discontinued only when ProPublica published an investigative report. And it is far from alone in such an approach.

Hospitals could strengthen the bonds with their patients and their families by ceasing such tactics right now. But the door closed long ago on any debt they presumably chose to sell to the highest bidder. HBO has some money to burn, but not nearly enough to buy up all that patient paper and retire it once and for all.--Ron (@FierceHealth)