Bankruptcy Law, Medical Debt

What Happens When You Fail to Pay a Hospital Bill?

Countless Americans struggle to pay for their medical expenses every year. It only takes one major medical crisis to set a person back thousands of dollars. If that person does not have adequate savings for emergency expenses, it can be very easy for that medical bill to turn up past-due and fall into collections. This situation is an all-too common occurrence for many Americans.

An estimated 43 million American consumers reportedly carry some amount of unpaid medical debt. It is also reported that half of all debt listed on American consumer credit reports is from medical expenses, according to a 2014 Consumer Financial Protection Bureau (CFPB) study.

Bankruptcy Law, Credit

Hospital Bankruptcies the Result of a Downward Trend

A recent study by the Department of Health Services Administration at the University of Alabama, reveals that it is not simply a “bad year” but a downward trend over time, decreasing volumes, reimbursement changes and deteriorating physician relationships that results in a hospital filing for bankruptcy.

While 67 percent of hospitals that filed for bankruptcy eventually closed, one-third completed a re-organization. The study examined a six-year period from 2000 to 2006, during which 42 hospitals across the nation filed for bankruptcy. Data was compiled from the American Hospital Association and trade publications to get detailed information on these organizations.

The study revealed that filing hospitals tend to be smaller and many factors were involved, including: poor financial management, changes in pay, reimbursement reductions, overzealous construction, purchasing of physician practices, decrease in volume and demographic shifts.

Many organizations often overlook the signs and wait until they are in a very poor financial condition before filing. If the hospital starts pursuing strategies to change earlier, they have a better chance at restructuring afterward. Hospitals need to look at the issue from a positive perspective. First, bankruptcy can be a good way for hospitals to get debt relief and be purchased by a system or other hospital. It also gives time to pause and think about how they will move forward in the future.


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If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.