Shortly after New Orleans officials announced a deal with Ochsner Health and a New York nonprofit organization to erase $59 million in old unpaid medical bills for some 66,000 patients, Ochsner confirmed it is rolling out the debt relief program system wide.
That means Ochsner is wiping out the medical debts of roughly 193,000 patients across the region that, collectively, owe $366 million for doctors visits, hospital stays, medical procedures, and other services — some of it dating back nearly a decade.
The deal was arranged by the nonprofit Undue Medical Debt, which negotiates with hospitals, doctors’ offices and ambulance services to purchase then erase the outstanding medical bills of those least able to afford it.
More than one in five Louisiana residents have unpaid bills resulting from health care services. Some studies suggest that people with outstanding medical debt may be less likely to seek care for health problems, which can lead to cascading negative health outcomes.
Ochsner is the largest health system in the state with 46 hospitals and 370 clinics and urgent cares in Louisiana, Mississippi and Alabama.
While the deal is seemingly significant for the health system and patients with outstanding medical debt, as a practical matter, it is largely symbolic, health care industry experts say.
Ochsner, like all health systems, writes off the debt it is unable to collect after a couple of years.
The hospital also cannot deny needed medical care to patients even if they have outstanding bills.
The hospital declined to comment on the system-wide rollout beyond a prepared statement that Ochsner Chief Financial Officer Jim Molloy issued earlier this week about the New Orleans deal.
“Ochsner is proud to have worked with Undue Medical Debt to enable the organization to acquire and cancel past one-time debts for eligible residents,” the statement said “In addition to our other longstanding practices that underscore our commitment to providing accessible healthcare – such as refraining from selling debt to secondary collectors – our partnership with Undue Medical Debt makes healthcare more equitable and affordable for our patients.”
Core issues
The catalyst for the deal between Ochsner and Undue Medical Debt was the city’s decision to allocate $1.3 million in federal pandemic relief money to pay off medical bills for patients in New Orleans, a spokesman for the nonprofit said.
“The city government gets a lot of credit for getting the ball rolling,” said Daniel Lempert. “Once we got in the door and explained our model to the hospital, there were other debts that qualified for the program.”
Ochsner Medical Center towers over trees in Jefferson, La., Thursday, May 11, 2023. (Photo by Sophia Germer, NOLA.com, The Times-Picayune)
Lempert said in addition to the pandemic money, his organization used funds it has received from donations and grassroots fundraising both locally and nationwide to purchase the bad debt from Ochsner. He declined to say how much the organization paid the health system, but based on what the organization has said it typically pays — about 1 cent for each dollar of debt — the amount would be around $3.6 million.
Healthcare consultant Wendell Potter said such programs are largely symbolic and do not address the reason so many Americans cannot afford to pay their medical bills in their first place.
“We have 30 million people who don’t have insurance or have plans with unreasonable out-of-pocket costs,” Potter said. “Medical debt is a worthy problem, but unless you address the core issues — exorbitant pricing and high out of pocket costs — you’re not really going to move the needle.”
