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A Disturbing Pattern in Non-Profit Healthcare

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Oct 11, 2019 |

Methodist Le Bonheur Healthcare, the largest hospital system in Memphis and the second largest private employer in Shelby County, Tennessee, boasts six hospitals and 150 outpatient centers, clinics, and physician practices in its health system.  It was also named by Fortune Magazine as one of the 100 Best Companies to Work For in 2018.  Its CEO, Dr. Michael Ugwueke, made $1.6 million in compensation in 2017.

As a non-profit organization, Methodist Le Bonheur Healthcare is generally exempt from local, state, and federal taxes.  Recognized as an industry leader, the non-profit healthcare system generates more than $2 billion in revenue annually and rank at the top for most profits per patient.   

However, these commendations are in stark contrast to recent revelations published by investigative journalists, which revealed a disturbing pattern of Methodist Le Bonheur Healthcare’s relentless pursuit of medical debts held by indigent people, many of them who were employed by the system.

Exploitation of the Indigent and Employees Trapped In the System

Methodist Le Bonheur Healthcare proudly proclaims that in 2016, it provided over $200 million in community benefits.  However, in a metropolitan area which is the second-poorest in the nation, where 1 in 4 residents live below the poverty line, Methodist Le Bonheur Healthcare’s financial assistance program essentially exempts patients with health insurance, meaning that those who cannot afford their out-of-pocket costs are sent to collections, where they face ballooning interest rates and legal fees.

Between 2014 and 2018, Methodist Le Bonheur Healthcare filed over than 8,300 lawsuits over non-payment.  On one day in January 2019, all 80 cases on the Shelby County General Sessions court docket had been initiated by Methodist Le Bonheur Healthcare.

To make matters worse, many of those subject to these suits are Methodist Le Bonheur Healthcare’s own employees who are given no other choice but to use the in-house medical services.  As their health plan bars them from seeking care at other hospitals, many that enjoy financial assistance options that don’t ignore patients with insurance, regardless of what they pay out of pocket.

Finally: Falling Into Line with Industry Practice

After the publication of these findings on June 27, 2019, the plight of these debtors received national attention.  Mere days later, Methodist Le Bonheur Healthcare announced that it would be suspending collection activities while it undertook a 30-day review of its practices, though it did so in a statement which stridently defended its financial assistance policies.   Thirty days later, true to its word, Methodist Le Bonheur Healthcare announced that it would be updating its patient financial assistance policies, including instituting a policy of not suing its own employees for their medical debts.    

On July 3, 2019, Methodist Le Bonheur Healthcare’s attorney requested that the court drop each of the 24 cases it was scheduled to participate in that day, and the hospital has not filed any new collections lawsuits since that date.   Then, on September 24, 2019, the big news dropped: the largest non-profit healthcare system in Memphis had erased the debts of more than 6,500 patients currently the subject of collections lawsuits.  With this newest development, Methodist Le Bonheur Healthcare has taken large steps towards abolishing their outdated practices, and has joined the ranks of many other large non-profit healthcare systems around the nation which at the very least severely curtail their suits against patients for unpaid debts.  Its policies are more fitting in today’s day and age, with is a growing epidemic of uninsured and underinsured people sweeping across the nation.