Indiana Nonprofit Hospitals Sue Consumers Over Medical Debt but Spend Little on Charity Care 

By Consumers for Quality Care, on August 28, 2024

Nonprofit hospitals in Indiana continue to use predatory debt-collection practices against consumers, even those who owe as little as $250. Meanwhile, charity-care spending at these hospitals has stagnated, according to a report by the Indiana Capital Chronicle, even as revenue continues to go up. 

In 2020, Patrick Lopez had to spend a week in the ICU at the nonprofit Community Hospital in Munster, Indiana. He had lived with asthma since childhood, but when he caught Covid-19, his lungs filled with fluid, and he needed intensive care. Unfortunately, he had just lost his job and therefore his health insurance, but he thought that he would be eligible for financial assistance.  

He was wrong. Although Lopez, a mechanic, is the sole provider for his four-person family, the hospital said that his income ($70,000) was $5,000 too much to qualify for charity care. Because of this, the hospital sent him a bill for $40,000. When Lopez couldn’t keep up with the $600 monthly payments, the hospital sued him, winning a nearly $27,000 judgement.  

National data compiled by the National Academy for State Health Policy found that nonprofit hospital revenue has increased over the last decade, but charity-care spending has not grown at the same rate. In 2012, Indiana hospitals spent about three cents of every revenue dollar on charity-care spending.  In 2022, it was just 1.5 cents per dollar.  

No federal rules specify how much charity care should be administered or who should qualify, and Indiana has no law even defining what constitutes charity care. Nearly half of all states require hospitals to provide financial assistance to consumers below a certain income level, but Indiana has no such requirement.  

In Indiana, nonprofit hospitals need only notify eligible consumers that financial assistance is available, but applying for it can be a difficult and time-consuming process. Often, consumers are required to furnish years of financial records to prove their eligibility. On top of this, nonprofit hospitals are permitted to harass patients who owe debt, report their debt to credit bureaus, garnish their wages, and even deny them non-emergency care. 

Thankfully, nonprofit hospitals have come under increased scrutiny for failing to provide adequate charity care and other community benefits. CQC urges nonprofit hospitals to hold up their end of the bargain to better serve their communities and deliver care for patients when they need it most. CQC also urges lawmakers and regulators to put an end to predatory medical debt collection tactics that harm consumers and exacerbate the medical debt crisis.