Ballad Health sued thousands of patients in poor, rural area

Part 2 of a four-part series examining how competing truths over consolidation impact a health system and its community.

JOHNSON CITY, Tenn.—When Danielle Sparrow quit her job to care for her youngest son, she stopped making monthly payments on a 2017 hospital bill.

The 38-year-old single mom, who lives in Church Hill, Tenn., said she was too overwhelmed at the time to call Ballad Health, and expected the health system would send her to collections on the remaining balance from her visit to Holston Valley Medical Center's emergency department in Kingsport for chest pain. But Sparrow said before she received any collection notices, Ballad sued her in August.

Sparrow said she has since worked out a payment plan on the $1,300 bill, which she received when she had employer-sponsored health insurance. She’s now busy raising three adopted children, ages 1, 3 and 5, all born drug-addicted, as well as three foster children, ages 9, 12 and 15.

Her youngest adopted son has a rare disorder called Smith-Magenis syndrome, the features of which include intellectual disability, delayed speech and behavioral problems like hair pulling, biting and head banging.

Sparrow said she works part time for a grocery delivery service but can’t work full-time because she takes her son to at least four medical appointments each week, including physical, occupational, speech and feeding therapy.

“So here I am, just adopted three children … working as much as I can and now I’m being sued,” she said. “What do I do?”

Ballad officials said they filed about 5,700 lawsuits against patients in its first fiscal year as a health system, which ended in June. That’s up from nearly 5,400 in the prior year, which ended June 2018, four months after its merger became official. They say they are simply trying to collect revenue that is the responsibility of the patient. Ballad's bad debt in fiscal 2019 was $141.2 million.

The not-for-profit health system has also filed roughly 900 liens in two Tennessee counties since it was formed.

What residents see as a more aggressive collections tactic is just one of the issues post-merger that's of concern to the community. Consolidated service lines, staffing issues, access to care and lack of transparency are others.

Ballad executives could not discuss specific lawsuits without signed privacy releases from patients, but CEO Alan Levine, said in Sparrow’s case, all of the protocols were followed.

“We are human and that’s not to say that there are not circumstances where there’s an oversight or there’s a mistake—that can certainly happen,” he said. “I am 100% certain in the cases that you provided to us, that that is not the case.”

Ballad contacts a patient a minimum of seven times in the 120-day window between a late payment and sending them to collections, said Lynn Krutak, the system’s chief financial officer. After that, she said the collection agency works with those patients for another 90 days.

Sparrow said she did not once hear from a collection agency in any form before the lawsuit.

“No phone calls, nothing in the mail, nothing,” she said.

Most of Ballad’s lawsuits are in Washington and Sullivan counties, where its two largest hospitals, Johnson City Medical Center in Johnson City and Holston Valley in Kingsport, are located. Ballad has filed nearly 400 lawsuits in Greene County, where it has two hospitals.

Ballad, with 2,424 acute-care licensed beds, is the only hospital provider covering a mostly rural, 21-county, two-state region hit hard by the coal industry’s decline. It was formed through a rare and controversial maneuver that was opposed by the Federal Trade Commission.

Greene County Circuit Court Clerk Chris Shepard said he has "definitely" observed an uptick in Ballad lawsuits since the merger and has asked the county for $500 more in postage to mail court documents related to Ballad lawsuits. He said other court clerks in the region have noticed the increase as well.

Ballad wins more than 99% of the cases it takes to court, meaning a judge agreed Ballad took the proper collection steps, Krutak said.

“They see the attempts we’ve made to try to work with those patients,” she said.

But in Greene County, most patients can’t afford to hire attorneys to fight the lawsuits, which would probably cost as much as their outstanding bills, Shepard said. The county's median household income is about $38,000, census data show.

“Times get hard,” he said. “You pay the light bill or you pay Ballad Health.”

In Tennessee, median incomes in those counties Ballad serves are $10,000 to $20,000 less than the statewide average. In Virginia, they’re $20,000 to $35,000 less, according to data contained in the certificate of public advantage that allowed Ballad to form.

Shepard said he’s also seen Ballad increase the practice of garnishing wages. The garnishments are placed on local businesses that employ patients who owe Ballad money. The businesses send monthly payments to the court. He said he doesn’t understand how the proprietors keep track of them all. “They could hire someone just to keep up with garnishments,” Shepard said.

Levine said Ballad is no different from hospitals all over the country that are suing patients, and encouraged Modern Healthcare to Google it. “We can pull up stories and give them to you,” he said. “This is a national phenomenon.”

That's true. UVA Health System in Charlottesville, Va., recently faced backlash after a Kaiser Health News investigation found the academic health system sues approximately 6,000 patients each year. Prior to that ProPublica found that between 2014 and 2018, Methodist Le Bonheur Healthcare in Memphis, Tenn., had filed more than 8,300 lawsuits against patients, whose wages were garnished as a result.

There really are no industrywide standards for dealing with collections. Most simply follow Internal Revenue Service guidelines that require hospitals to make “reasonable efforts” to qualify a patient for financial assistance before initiating collections.

But as more patients cover the cost of healthcare because of high-deductible plans or out-of-network billing, more hospitals will need to find ways to address uncompensated care.

Not-for-profit hospitals’ bad debt is projected to increase at least 8% this year as the high-deductible health plan trend continues, according to Moody’s Investors Service.

Earlier this year, Atlanta-based Piedmont Health said it was trying to shave down its $250.7 million in bad debt by requiring patients who were responsible for their entire bill to pony up a quarter of the amount before receiving non-emergent services. Meanwhile Dignity Health said it would streamline payment processing to settle bills in real time.

Other health systems have outsourced thousands of revenue-cycle employees to third parties while others employ one-off technology solutions. But layering different types of software can complicate matters and be extremely costly to providers.

In fact, the cost of billing activities will amount to $496 billion in 2019, according to an estimate from the left-leaning think tank Center for American Progress.

Krutak said Ballad wouldn't sue patients or guarantors on the bill who are unemployed, making minimum wage or going through bankruptcy. She also said they wouldn't sue patients over 65 years old, or for very small or very large balances where there are likely extenuating circumstances.

If the patient responds or tries to make payments during the collection period, Krutak said they should never end up in court.

“That’s why we have copious notes on all of these accounts and review everything before we decide to send it through legal proceedings,” she said.

Viewed as a percentage of patient accounts, 0.55% were sued in fiscal 2019, compared with 0.56% in fiscal 2018, Levine said.

Lisa Kirk, a 39-year-old Greeneville resident, said she had been making her $50 monthly payments on time from the 2015 hospital visit when she gave birth to her daughter. The single mom said she made a payment in August 2018 and shortly after noticed her credit score plummeted from nearly 800 to below 600. That’s when she learned Ballad had sent her to collections. She called the collection agency right away.

“I told her I shouldn’t be in collections because I have been making my payments like I was supposed to,” Kirk said. “The lady then informed me that I wasn’t allowed to make payments, that when the bill came in, it was my responsibility to pay it in full.”

Kirk said she is still in collections today. She works as a telephone representative and just got a raise to $15 per hour.

“You’ve got a lot of people out there—especially after having a kid or the elderly—who don’t have the extra money set back and they’re being told, ‘You have to pay the bill in full or we’re going to take you to court,’ ” she said. “I don’t like the way they deal with people.”

Sparrow, the patient mentioned earlier in this story, believes Ballad makes mistakes communicating collection notices. She said she recently received one that contained her address but a stranger’s name. She was confused because neither she nor her children have been to the emergency department this year. She said she called the collection agency and was told the bill was supposed to go to the Sullivan County Jail. Sparrow lives in Hawkins County.

“This person’s collection notice came to my house,” she said. “They could have sent my collection notice to someone else’s house. There could have been one for me and I could have handled the problem then, versus them having to go through this measure to sue me.”

Modern Healthcare provided Sparrow's and Kirk's names and case numbers, along with those of other patients, to Ballad, and Levine said while he could not discuss the cases specifically without signed privacy releases from the patients, Ballad’s policies were consistently applied in each case.

“I’ll say this in the strongest terms: If these stories are being used—I can’t go any further than that without a release,” he said. “We have evidence of each of these cases and copious notes and histories.”

After the merger, Ballad increased its charity care so that patients whose household incomes fall below 225% of the federal poverty guidelines now get care for free, compared with 200% before the merger, Levine said.

“The reality is that more people are getting free care now than before the merger, and that’s an indisputable fact,” Levine said.

Patients are not eligible if their asset value exceeds $5,000, according to Ballad's financial assistance policy. To determine eligibility, Ballad will consider patients’ property value, car value, bank accounts and other investments. The policy says patients “may” be eligible for partial discounts if their household incomes are between 225% and 450% of the federal poverty guidelines.

Ballad’s goal is to help every patient it can, Levine said.

“On other hand, as a mission-driven organization that provides a lot of services to people who can’t afford to pay, as good stewards, we also have to try to collect from people who can pay,” he said. “And frankly, it’s an issue of fairness for the people who do pay their bill that we do what is appropriate to ensure that other people who can pay their bill pay their fair share.”

Our next installment in this four-part series explores the safety and quality issues residents say are brought on by staffing inadequacies.