Hospital Seeks Court OK to Sell Medical Debt

by Mike Bevel, CollectionIndustry.com

New York City’s Saint Vincent Catholic Medical Centers wants to sell $190 million in bad debt racked up by patients who failed to pay medical bills for about $1.76 million to a unit of Equicare Capital LLC, which specializes in buying debt that health care providers have written off.

That $190 million represents the hospital system?s total delinquent accounts for over the past six years.

St. Vincent filed for bankruptcy in July of 2005.

Saint Vincent, which bills $1.5 billion for patient care and medical services a year, told the Associated Press that it has traditionally been forced to write off about 6.5 percent of its unpaid accounts receivable each year.

Equicare Capital has also agreed to acquire Saint Vincent’s future bad debt over the next two years, a deal the company said will earn it about $450,000 a year.

Because the sale is outside the scope of its ordinary course of business, Saint Vincent said it wants to bypass the bankruptcy court’s auction process and sell its written-off accounts to Equicare through a private sale.

Judge Adlai S. Hardin of the U.S. Bankruptcy Court in Manhattan, which is overseeing Saint Vincent’s Chapter 11 case, will consider approval of the sale at a Dec. 12 hearing.