Medical debt financing and “patient access” companies are pitching their services to struggling rural hospitals nervous about keeping the doors open, as congressional Republicans consider healthcare cuts that could leave 16 million Americans without insurance.
These companies, who act as middlemen between hospitals and patients, told the Guardian they could be a solution for cash-poor hospitals seeking to get paid by “subprime patients” – especially the low-income, uninsured and unbanked.
“These guys are losing money – it’s not sustainable,” said Chris Stenglein, CEO of Curae, about hospitals and healthcare providers. Curae is a company that charges hospitals a fee to find money from all sorts of sources – including patients.
“I believe the next huge bailout is going to be health systems.”
Middlemen are nothing new to American healthcare – the Commonwealth Fund found that the administrative complexity of US healthcare accounts for nearly one-third of the sky-high price of care in the US.
What is new is the potential market disruption created by Republicans. A bill passed by House Republicans before Memorial Day would cut Medicaid by $804bn and Obamacare, formally known as the Affordable Care Act, by $301bn – changes in the Big Beautiful Bill Act that are expected to result in 16 million newly uninsured Americans by 2034. That disruption represents risk for hospitals and patients, but an opportunity for business.
“This really underscores the through line between Medicaid cuts today equal medical debt tomorrow,” said April Kuehnhoff, a senior attorney at the National Consumer Law Center (NCLC). “This is really going to harm the most vulnerable patients in the United States.”
Hospitals face real risk staying afloat: margins at the nation’s roughly 3,000 for non-profit hospitals, about half of all nationally, reached an eight year low in September 2023, according to a recent report from consulting firm Deloitte. Operating margins were just 0.8% on average that year.
“Providers carry more consumer paper than all of your regional banks combined,” said Stenglein, referring to consumer debt. “In some cases, they got $1.3bn they write off every year.”
Stenglein views himself as a good guy in this fight, working in a “dysfunctional” system to help people like his own parents. His mother worked at the grocery store chain Winn Dixie and his father was a truck driver. Started eight years ago, Curae is now a subsidiary of Atlanticus Holdings Corporation, which owns a portfolio of credit cards for subprime borrowers. The publicly traded corporation is valued at $794m.
Firms like Curae offer an appealing pitch to hospitals, finding money from every conceivable source, such as insurers, discount drug programs, philanthropy and patients.
But none of these services are free. Like the back end of a credit card, Curae charges hospitals a “processing fee” of up to 6% for every transaction, Stenglein said in an interview. In written questions, Curae later declined to confirm its processing fee rate, stating: “Our program management fees are confidential.”
Curae also facilitates financing to patients, specializing in payment plans and interest-bearing loans to patients who are “higher risk/subprime patients, who usually would never get approved for any sort of credit”, a spokesperson told the Guardian. Curae is not a lender, but brands loans through the Bank of Missouri. The spokesperson said Curae-branded loans are available to patients who would struggle to “even be approved for other loans such as for cars”.
However, Curae does not refer patients, including the marginalized consumers the company specializes in, to nonprofit hospitals’ charity care programs. “No, the hospital administers that program,” the company said in written questions.
Curae-branded loans are 0% interest for patients up to 24 months. Longer term loans cost between 9.9% and 36% based on creditworthiness for longer terms, according to a June 2021 cardholder agreement. Stenglein said only 3-4% of the “patient population” sign up for interest-bearing loans, which together with payment plans represent about one-fifth of the business.
A more recent cardholder agreement provided by Curae showed a long-term APR of 14.99%, although the cardholder agreement represented an approved rate for one individual borrower, and not the full range of possible rates.
Some patients have lodged complaints about this system publicly, including an Arizona teacher who said she was “infuriated” when she was signed up for a credit card without her knowledge.
“I got a hit on my credit saying somebody did a hard look at my credit, and of course I was freaking out, like what is going on?” Kerry Morgan told local TV station AZFamily. “Come to find out, it was Banner [Health]” a non-profit hospital system that partners with Curae, “hit my credit and signed me up for a credit card to put the payments on”.
Despite fees hospitals must pay on top of already low margins, and the potential for patient complaints, some providers still find the deal enticing.
“Hospitals simply do not have the sophisticated skill to squeeze money out of patients,” said Ge Bai, a professor at Johns Hopkins Carey School of Business and a healthcare accounting expert.
“We’re going to see more and more businesses like that that help hospitals enhance revenue. You’re already seeing a flourishing, thriving industry,” of financial middle men.”
A testimonial sent to the Guardian by Curae provides a window into this appeal: a Banner Health employee said Curae helped the hospital “improve collections” at the “point of service” (their healthcare facilities) “by $22m compared to 2023”. More than 90,000 patients applied for financing with Banner in 2024.
“I’ve worked in the field of Patient Access [sic] for 22 years,” wrote Jarrod Brown, senior director of patient access at Banner Health. “Curae has been a major win for our patients, by providing a financing option focused on their healthcare needs.”
Kuehnhoff said Curae’s specialism in the “subprime patient”, calls into question whether hospitals are pushing patients who might be eligible for free or discounted care – known as “charity care” – into payment plans.
“Does this person who needs medical financing actually qualify for charity care through the hospital? And are they being shunted to a medical financial product rather than appropriately given the assistance they qualify for?” Kuehnhoff asked rhetorically.
Traditionally, hospitals have provided patients with interest-free payment plans and the majority still do. A recent research letter published in Jama Health Forum found only 8.5% of hospitals promote what the study described as “interest-bearing” payment products.
“Hospitals have really tried to step up to offer long term payment plans for at least some of the patients within some income brackets – to try to work with people,” said Erin Duffy, a Scholar at the University of Southern California’s Schaeffer Institute and a co-author of the study.
But insurers have increasingly pushed costs onto consumers, which has forced hospitals to collect directly from patients.
By 2022, medical debt was the most common form of debt in collections, according to the Consumer Financial Protection Bureau (CFPB), and most patients in debt to hospitals were insured, according to a widely cited report. The same year, about one-quarter of American adults said they had a past due medical or dental bill, according to a survey by Kaiser Family Foundation.
Before Trump entered office, the Biden administration attempted to prevent debt collectors from reporting medical debt to credit agencies as a form of relief – efforts debt collectors fought and that abruptly ended with the gutting of the CFPB.
“I don’t think we want to make a case that these are evil companies because at the end of the day they did increase access for some patients on the net,” said Bai. Instead, Bai views the system like Stenglein – “dysfunctional”.
“We have toxic soil – that’s why we’re seeing all kinds of outlandish plants grown.”
