Methodist University Hospital in Memphis is a nonprofit: it pays virtually no local, state or federal tax; but unlike other Methodist hospitals, Methodist University Hospital is relentless in pursuing medical debts from indigent patients. The hospital owns its own collection agency, and is one of the leading litigants in Tennessee's debt courts.
At issue is Methodist University Hospital's policy of requiring patients to cover any expense excluded by their insurers, no matter how high that deductible or excess is and no matter how poor the patient is. And since Obamacare's lowest-cost plans carry incredibly high deductibles and excesses, and exclude many forms of care, the poorest patients at Methodist University Hospital are also expected to pay the highest bills.
There are a lot of poor people in Memphis, which is the second-poorest city in America, with more than 40% of the city's workforce earning less than $15/hour. The poor people of Memphis include Methodist University Hospital's own staff, many of whom have been sued by Methodist University Hospital because they couldn't afford their medical bills on the salary the hospital paid them. In addition to suing dozens of its own employees, Methodist University Hospital has garnished the wages it pays to more than 70 of its own workers.
Memphis's inequality closely tracks with race, with Black people carrying a much higher risk of poverty.
Methodist University Hospital's management -- including CEO Dr. Michael Ugwueke, who was paid $1.6 million in total compensation last year and former CEO Gary Shorb, who draws $1.2m/year to serve as Ugwueke's advisor -- are apparently pursuing this agenda on their own. One former long-serving board member, Beverly Robertson (2003-12) says she had no idea that the hospital had pursued its patients so aggressively.
As a nonprofit, Methodist University Hospital is required to provide "a significant community benefit, including charity care and financial assistance." In 2018, the hospital made a $86m operating surplus, suggesting that it has plenty of room to subsidize the poor people it is currently suing.
The Hospital's pettiness and meanness are really unbounded: they chased one patient from low-paid job to low-paid job seeking to garnish her wages, ultimately getting TJ Maxx to garnish her paycheck from a part-time, low-waged job. Her wages there were so low that many weeks they didn't rise to the level where the law permitted garnishments; other weeks, the amount the hospital was legally entitled to take from her was as low at $3.67.
When the hospital is unable to collect from its poorest patients, it adds penalties and interest to their debt, so that a patient who chooses to go to a payday lender to borrow money to pay the $100 a court has ordered her to pay might end up more in debt to the hospital and to the loan-shark at the end of the week.
It's a form of debt indenture, being undertaken by a Christian, faith-based nonprofit institution with a public duty to perform charitable works.
Methodist knew that Barrett was a low-income worker, yet it added interest to her account seven times, in amounts ranging from $46 to $7,340.
Charging that much interest to a low-income patient is “unconscionable,” said Fred Morton, a retired minister of Christ United Methodist Church in East Memphis.
“That’s a 21st-century version of slavery,” said Morton, who serves on the economic justice committee for MICAH, a coalition of community and faith-based organizations. “That kind of indebtedness. … That’s horrible to me.”
By 2017, Barrett had moved in with a friend and her mother, both amputees, and cared for them in exchange for a place to stay.
In April of that year, Barrett filed a motion to stop the wage garnishment and offered to pay $40 per month. She told the court her income was $800 per month.
The judge agreed, but then Barrett’s sister, who was unmarried and never had children, fell ill. When Barrett stopped working to care for her, she fell behind on her payments.
“I went and borrowed money through those payday loans to make those payments,” she said. “It was just a struggle for me.”
Every 30 days, she pays $60 to renew the $300 loan, at an effective annual interest rate of more than 240%.
The Nonprofit Hospital That Makes Millions, Owns a Collection Agency and Relentlessly Sues the Poor [Wendi C Thomas/MLK50 and Propublica]
(Image: Methodist University Hospital)
