Nonprofit Health System Ends Practice of Denying Care to Patients in Debt

Allina Health, a large nonprofit health system based in Minnesota, announced Wednesday that it would end its policy of denying medical care to patients with $4,500 or more in outstanding bills.

Although Allina’s hospitals treated anyone in emergency rooms, other services were cut off for indebted patients, including children and those with chronic illnesses like diabetes and depression, The New York Times reported in June. Patients weren’t allowed back until they had paid off their debt entirely.

Allina issued its policy change less than a week after Keith Ellison, the attorney general of Minnesota, announced that his office was investigating Allina’s practice of withholding care from patients with debt. The investigation is part of a broader look at how the state’s hospitals, which are all nonprofit, bill patients for medical care.

“There is a growing consensus that there is very little difference between a for-profit and nonprofit hospital when it comes to behavior,” Mr. Ellison said in an interview.

Nonprofit hospitals like Allina get massive tax breaks in exchange for providing care for the poorest, most vulnerable people in their communities. But an investigation by The Times last year found that over the past several decades, many nonprofits had largely abandoned their charitable missions, with devastating consequences for patients.

Allina Health owns 13 hospitals and more than 90 clinics in Minnesota and Wisconsin. Its nonprofit status enabled Allina to avoid roughly $266 million in state, local and federal taxes in 2020, according to the Lown Institute, a think tank that studies health care.

In exchange for those lucrative tax breaks, the Internal Revenue Service requires Allina and its nonprofit peers to provide services to their communities, in part by offering free or reduced-cost care to patients with low incomes.

But the federal rules are silent on how poor patients need to be to qualify for free care. In 2020, Allina spent less than half of 1 percent of its expenses on charity care, well below the nationwide average of about 2 percent for nonprofit hospitals, according to an analysis of hospital financial filings by Ge Bai, a professor at the Johns Hopkins Bloomberg School of Public Health.

“The industry needs to tell people they might be eligible for charity care,” Mr. Ellison said. “People don’t seem to be told that ever.”

At least 100 million Americans struggle with medical debts. Their bills account for about half of all the outstanding consumer debt in the country.

Hospitals have increasingly used an array of aggressive tactics to collect debt from patients. Some flood local courts with lawsuits to wring payments from patients. Others garnish patients’ wages or seize their tax refunds.

But Allina’s policy took things a step further.

A 12-page document had instructed the health system’s staff on how to cancel appointments for patients whose debt totaled $4,500 or more. The policy walked providers through how to lock the patients’ electronic health records so that staff members could not schedule future appointments.

Some of the patients who were kicked out had incomes low enough to qualify for Medicaid, the federal-state insurance program for poor people.

Allina employees said the policy had forced them to ration care, even for children.

The health system had initially defended this policy when contacted by The Times in May, noting that it only cut off patients after contacting them by phone and after sending repeated letters that included information about applying for financial help.

But Conny Bergerson, a spokeswoman for Allina, said in a statement this week that the health system had re-examined the policy this summer, and decided that there were “opportunities to engage our clinical teams and technology differently to provide financial assistance resources for patients who need this support.”

Allina’s doctors are continuing to press for additional changes. Earlier this month, the system’s primary care physicians began an effort to form a union. If successful, it would be the nation’s largest union of clinicians. Some doctors are pressing for legislative changes that would restrict or outlaw the practice of withholding care from patients with outstanding bills.

“The state of Minnesota should prohibit the refusal of medical care to children based on medical debt,” said Jennifer Mehmel, a pediatrician who recently retired from her position at Allina. “Children are clearly the innocent victims in this, yet they’re bearing the cost of the problem.”