On this blog, we have written a great deal about bad debt. That is because it is one of the biggest problems facing the hospitals and medical facilities in this country. It has brought many to the brink of bankruptcy, which can bring down a hospital, but also cause major problems for the local residents serviced by the facility. For many in this country, there is only one hospital in a 100-mile radius. If that hospital closes, the need for emergency care takes on much greater significance. Of course, the administrators of these facilities do not want to see them fail and are taking drastic measures to ensure that they don’t.
For many hospitals, this has meant a search for alternative funding. In large part, this alternative financing is necessary to restore proper cash flow, destroyed by the mounting bad debt. It’s not the fault of the patients, in many cases. Though more people are insured, there are still many who simply cannot afford what they are expected to pay out of pocket. Insurance gaps, high deductibles, and co-pays often add up to more than a family can stand to let go. Even payment plans are a significant financial burden for households already strapped.
Therefore, hospitals need to find alternative funding, if they intend to continue providing health services for patients who may not be able to pay their debts. This has led to small hospitals seeking financial partners. Private investors have shown some interest in hospitals, and there are some partnerships taking form across the country. In other situations, a loan is enough to give the needed boost to cash flow. Headlines are featuring stories of hospitals signing on the dotted line, in order to get the money that they need now, accepting repayment plans with the hope that the healthcare situation in the nation is settled soon.