As insurance deductibles and instances of out-of-network care increase, hospitals have adopted a range of methods for collecting patient debts, including wage garnishment. Hospitals with greater financial need are more likely to aggressively pursue this debt collection, according to research published in JAMA.
Researchers searched 2017 court records in Virginia to identify completed warrant-in-debt lawsuits, defined as one party suing another individual for an unpaid debt, filed by hospitals that resulted in a patient’s wages being garnished. Hospital characteristics and patient employer data were collected.
The investigators identified 20,054 warrant-in-debt lawsuits and 9232 garnishment cases in Virginia in 2017. Garnishments occurred in 36% of Virginia hospitals (71% nonprofit and 75% urban). The mean annual gross revenue of the garnishing hospitals was $806 million; the mean amount per hospital was $722,342, or 0.1% of gross revenue. Per patient, the mean amount garnished was $2783.15 (range $24.80-$25,000). Per hospital, the mean number of garnishments was 82, with 8399 patients who had wages garnished.
Nonprofit hospitals were more likely to garnish wages vs for-profit hospitals (incidence rate ratio [IRR] 11.52; 95% CI, 2.05-64.64), and hospitals with higher markup ratios relative to amount allowed by Medicare (IRR 2.81 per 100% increase; 95% CI, 1.69-4.69).
As annual gross revenue increased, garnishments decreased (IRR 0.76 per $100 million; 95% CI, 0.65-0.89). Across the state, 5 hospitals (4 nonprofit and 1 for-profit) accounted for more than half (51%) of all garnishment cases. Employers of people whose wages were garnished included Walmart, Wells Fargo, Amazon, and Lowes.
Limitations to the study include the lack of patient-specific data beyond employer name, limiting conclusions about the association of income, insurance, or employment with wage garnishment. Generalizability of findings may be limited because the data were from only a single state in a single year.
“Future studies should examine the contribution of garnishment to a hospital’s revenue and the effect of garnishment on patients,” the researchers concluded.
Dr Makary reports receipt of a payment for a book published by Bloomsbury USA.
Bruhn WE, Rutkow L, Wang P, et al. Prevalence and characteristics of Virginia hospitals suing patients and garnishing wages for unpaid medical bills [published online June 25, 2019]. JAMA. doi: 10.1001/jama.2019.9144