Many hospitals in the United States use aggressive tactics to collect medical debts. Local courts are flooded with debt collection lawsuits. They garnish patients' wages. These confiscation of their tax refunds.
But a wealthy nonprofit health system in the Midwest is among those taking things a step further: withholding care from patients who have unpaid medical bills.
Allina Health System, which operates more than 100 hospitals and clinics in Minnesota and Wisconsin and generates $4 billion in annual revenue, sometimes turns away patients who are deeply in debt, according to internal documents and interviews with doctors, nurses and patients.
Although Allina hospitals will treat anyone in the emergency room, other services may be cut off for overburdened patients, including children and those with chronic illnesses such as diabetes and depression. Patients are not allowed to return until their debt is paid in full.
Nonprofit hospitals like Allina receive huge tax breaks in exchange for providing care to the poorest people in their communities. But a New York Times investigation last year found that in recent decades, nonprofits have fallen short of their philanthropic missions, with few consequences.
Allina has an express policy of cutting off patients who owe for services received at the health system's 90 clinics. A 12-page document reviewed by the Times instructs Allina staff on how to cancel appointments for patients with at least $4,500 in unpaid debt. The policy describes how to lock their electronic health records so staff cannot schedule future appointments.
“These are the poorest patients who have the most serious medical problems,” said Matt Hoffman, an Allina primary care physician in Vadnais Heights, Minn. “These are the patients who need our care the most.”
Allina Health said it has a robust financial assistance program that in an average year helps more than 12,000 of its 1.9 million patients with medical bills. The hospital system only cuts off patients if they've racked up at least $1,500 in unpaid debt three separate times. It contacts them by phone and with repeated letters that include information about applying for financial aid, said Conny Bergerson, a hospital spokeswoman.
“Allina Health's goal is, and always will be, to have no patients without services for financial reasons,” Ms. Bergerson said. He said the disruption to services was “rare” but declined to provide information on how often it happens.
Allina suspended its patient cut-off policy in March 2020 at the start of the coronavirus pandemic, before reinstating it in April 2021.
An esteemed one 100 million Americans have medical debt. Their accounts make up about half of all outstanding consumer debt in the country.
About 20 percent of hospitals nationwide have debt collection policies that allow them to cancel care, according to a research last year by KFF Health News. Many of them are non-profit organizations. The government doesn't track how often hospitals withhold care.
Under federal law, hospitals are required to treat everyone who comes to the emergency room, regardless of the person's ability to pay. But the law — called the Emergency Medical Treatment and Labor Act — is silent on how health systems should treat patients who need other types of life-saving care, such as those with aggressive cancers or diabetes.
In 2020, thanks to its nonprofit status, Allina avoided about $266 million in state, local and federal taxes, according to the Lown Institute, a think tank that studies health care.
In return, the Internal Revenue Service requires Allina and thousands of other nonprofit hospital systems to benefit their local communities, including by providing free or reduced-cost care to low-income patients.
But federal rules do not dictate how poor a patient must be to qualify for free care. In 2020, Allina spent less than half of 1 percent of its costs on charity care, well below the national average of about 2 percent for nonprofit hospitals, according to a analysis of hospital financial records by Ge Bai, a professor at the Johns Hopkins Bloomberg School of Public Health.
Allina is one of Minnesota's largest health systems, having grown largely through acquisitions. As of 2013, her annual earnings ranged from $30 million to $380 million. Last year was the first in a decade that it lost money, largely due to investment losses.
Financial success paid dividends. Allina's president won $3.5 million in 2021, the most recent year for which data is available. The health system recently built a $12 million conference center.
However, Allina sometimes plays hardball with patients. Doctors are used to seeing messages in the electronic medical record notifying them that a patient will “no longer be eligible for care” because of “unpaid medical balances.”
Dr. Rita Raverty, a primary care physician who works at an Allina clinic, said the notices were troubling because they meant she couldn't provide ongoing care to some of her patients who face various health risks.
“Nobody wins when patients can't get preventive care,” Dr. Raverty said. “It creates worse disease outcomes when you don't catch things early.”
Doctors and patients described being unable to fill out medical forms that children needed to register for daycare or show proof of vaccinations for school.
Serena Gragert, who worked as a scheduler at an Allina clinic in Minneapolis until 2021, said the computer system simply wouldn't let her make appointments for some patients with outstanding balances.
Ms. Gragert and other Allina officials said some of the patients who were kicked out had incomes low enough to qualify for Medicaid, the federal government insurance program for poor people. This also means that these patients would be eligible for free care under Allina's financial assistance policy — Something many patients don't know exists when they seek treatment.
Ms. Bergerson, the Allina spokeswoman, did not dispute that, but said the health system made “tremendous efforts to help patients with their financial obligations for medical care.”
Allina employees said the policy forced them into rationing.
Beth Gunhus, a pediatric nurse practitioner, recalled an instance in which a mother brought her three children. One had scabies, an intensely itchy skin condition caused by mites burrowing into the body. He wanted to follow best practices and treat the whole family, who shared a bed in a rented single room, to ensure the scabies did not spread further. But she could only write a prescription for two of the children. The third party's account was locked due to unpaid bills.
“There are so many better ways to save money than what we're doing,” Ms Gunhus said.
Allina says the policy only applies to debts related to care provided by its clinics, not its hospitals. But patients said in interviews they were cut off after running up debts for services they received at Allina hospitals.
Because Allina is the dominant health system in some rural areas of Minnesota, the layoff may leave patients with few options.
Jennifer Blaido lives in Isanti, a small town outside of Minneapolis, and Allina owns the only hospital there. Ms. Blaido, an engineer, said she racked up nearly $200,000 in bills from a two-week stay at Allina's Mercy Hospital in 2009 for complications from pneumonia, along with several emergency room visits for asthma flare-ups. Ms Blaido, a mother of four, said most of the hospital stay was not covered by her health insurance and she was unable to scrape together enough money to make a dent in the debt.
Last year, Ms Blaido had a cancer scare and said she was unable to make an appointment with a doctor at Mercy Hospital. He had to drive more than an hour to be seen at a health system not affiliated with Allina.
Allina does not make this policy clear to patients. is was not mentioned on the health system's list of “frequently asked questions” about billing practices. On at least one occasion, Allina has denied it even existed.
In a lawsuit filed last year in Minnesota state court, Allina sued a couple, Jordan and JoLynda Anderson, for nearly $10,000 in unpaid medical bills.
In court filings, the couple described how Allina canceled Ms. Anderson's appointments and told her she couldn't make new ones until she set up three separate payment plans — one with the health system and two with his debt collectors.
Even after setting up these payment plans, totaling $580 per month, the canceled appointments were never reinstated. Allina allows patients to return only after they have paid the entire debt.
Ms. Anderson remembers being devastated to miss her appointment with an endocrinologist who specialized in a chronic condition she has. He had already waited four months for the appointment and could not get a new one.
“I felt like I was being punished, and the punishment was to stay sick,” she said.
Ms. Bergerson declined to comment on those cases, citing patient confidentiality.
When the Andersons asked the court for a copy of Allina's policy barring patients with unpaid bills, the hospital's attorneys responded: “Allina has no written policy regarding the cancellation of services or the termination of scheduled and/or physician referrals or appointments for unpaid debts”.
In fact, Allina's policy, which was created in 2006, instructs employees how to do just that. Among other things, it tells staff to “cancel any future appointments the patient has scheduled at any clinic.”
It provides some ways for patients to keep visiting despite their unpaid bills. One is by getting a loan approved through the hospital. Another is filing for bankruptcy.
Susan C. Beachy contributed to the research.
