Purchasing Medical Debt

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This is interesting and needs to be broken down.  John Oliver from HBO’s Last Week Tonight spent $50 to start a debt-acquisution company, called Central Asset Recover Professionals, short for, “C.A.R.P., after the bottom-feeding fish.

Soon after, he was offered nearly $15 million in medical debt for less than $60K. But instead of setting out to collect the debt, he decided to forgive it, partly because “it was the right thing to do” and partly to claim bragging rights to “the largest onetime giveaway in television history.”

Not sure what to think of John Oliver as I don’t watch him enough.  All the clips I see are of him being a liberal wonk ragging on anything conservative or capitalistic.  I have a few questions and observations, however, from what he did.

  1. I can’t believe you can buy debt for that cheap and then try to collect it. Ridiculous.
  2. I think it is really cool that rich people could buy debt and basically absolve others from the gouging of hospitals.
  3. I think in the long run that if this trend happens we would be in more trouble.

It just seems that the hospitals have giving up on this debt. They know the people who are never going to pay and they sell it off to bounty hunters who try anything.  Good or bad that is reality.  Doing what Oliver did seems great but just letting everyone NOT pay their bill would not fix the healthcare cost problem.  You see, hospitals cost share by charging other people even more when they know some patients will never pay. So, if more and more people stop paying then other people get charged even more.  This means that your regular joe who believes in paying his bills will do so at triple the price or more. Nothing occurs in a vacuum. There is a ripple effect to every action and good old John Oliver gets to come off on the moral higher ground because he gives no context.  Life just isn’t that simple.

If what I am saying is correct then what Oliver did was just pander for ratings, which is just as bad as what he complaints about.

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  8 comments for “Purchasing Medical Debt

  1. T Newberry
    June 8, 2016 at 2:40 pm

    Doug, I think your points have some merit, but are more appropriately applied to non-medical debt. Nobody is out there racking up medical debt on purpose. And with the rising cost of insurance along with all the gotcha loopholes in the coverage, stumbling into life-crushing medical debt can happen in an instant. Fully 90% of the population, if not more, don’t have the ability to casually absorb 10s of thousands of dollars in unexpected medical expenses. I know I couldn’t.

    Selling these debts for pennies on the dollar is what is known in business as yield management. In your DPC practice, prices may be based on cost and be the same for everyone. In the rest of the industry, prices have no relation to costs and are different for everybody. Ultimately, they are based on what a person and their insurance company are willing to pay. They can even manage to get a few pennies on the dollar from people who have no ability or willingness to pay.

    In such a system, what one person pays has little effect on what they try to collect from others. That regular joe who believes in paying whatever inflated charges they pull out of their asses is a perfect sucker for the industry and can blame himself for the high prices.

    • Doug Farrago
      June 8, 2016 at 2:42 pm

      Yeah, but he would have to hire a lawyer or third party to negotiate that debt doubt which sucks

  2. June 8, 2016 at 1:16 pm

    Your comments prove once more the divide between doctors who are more well-off than they realize and the poor people they serve. My main complaint about John Oliver was that all the debt was from Texas, and we need an organization to do this around the country.

    The debt he bought has already long been written off. It is off the books. The hospital already has long forgotten it. It is old enough to vote, in some cases. But companies are still buying it and harassing the people who owed it to pay them for it. This is bottom-feeding — give someone who has less money than you do enough stress that they might not realize they no longer legally owe this debt so that they will give you money.

    • Pat
      June 8, 2016 at 3:34 pm

      Moss, why the shot at docs? Pushing class warfare is what started this mess, and certainly won’t solve it.

  3. DoctorSH
    June 8, 2016 at 9:21 am

    If the charges/debt was truly from a hospital, then we know the $15 million on the books as debt was really the normal ridiculous overcharging hospitals do. The real cost of the care was probably more like 10% or $150,000.
    So the hospitals by selling the debt for $60,000 probably made a good move as they would have probable not recovered even half that amount had they held it themselves.

  4. R
    June 8, 2016 at 8:43 am

    You can purchase debt that easily and cheaply, because it is debt that is hard to impossible to collect on. It is often not legitimately still owed. Unfortunately physicians, and hospitals seek to gain some improved economics by selling their old debts (often returned to them from a collection agency) to try and get some “value” from this paper.

    And more unfortunately this debt is usually owed by people that can’t pay it, as opposed to those that can, and choose not to.

    check out the charity he gave the debt to to forgive http://www.ripmedicaldebt.org

  5. Pat
    June 7, 2016 at 6:11 pm

    I thought his schtick was clever, but you are quite right: it’s still someone seeking acclaim and adoration on someone else’s buckle, without thinking into the second or third level of analysis. Perfect for emotion-driven masses, and nothing more.

  6. Dave Chase
    June 7, 2016 at 8:22 am

    His piece on Special Taxing Districts is worth watching – https://www.youtube.com/watch?v=3saU5racsGE

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