A giant US hospital chain says it’s leading the fight against medical debt. Not all patients agree

Advocate Health, one of America’s largest hospital chains, says it is working hard to confront one of the biggest problems in US healthcare today – promoting itself as “a leader in the effort to solve the nation’s medical debt crisis”.

The non-profit hospital system says it has revamped its billing and collection practices and boosted the number of patients who qualify for charity care. In September 2024, it announced it would take the “bold step” of canceling thousands of debt judgments held as liens against patients’ homes in multiple states, including North Carolina, where the fast-growing chain is headquartered.

But for many patients, the hospital group’s moves fall short of taking full responsibility for the years of real-world hardships its billing and collection practices have caused.

They say the chain’s tactics drained their bank accounts, ruined their credit and, in some cases, helped push them into bankruptcy. Many say they lived under dark clouds for years, even decades – worrying about losing their retirement nest eggs or money they had hoped to pass on to their children. Some felt helpless. Some felt shame. One recalled feeling, simply, “defeated”.

Several patients told the Guardian that their health suffered from emotional distress over their debt to the hospital chain – and because fear of piling up even more medical bills discouraged them from going back to the doctor.

John Ashley said the debt he and his wife landed in after he received care at one of the chain’s hospitals in North Carolina “financially destroyed us” and “made us reluctant to seek medical care for anything”.

He had gone to the emergency room with “tunnel vision” and alarmingly high blood pressure. The two of them were having trouble making ends meet and had no money to cover the bill. The hospital chain sued them in 2013 and won a judgment for $5,771.

“They only offered to lower the bill slightly if I didn’t fight the lien on my house,” Ashley recalled. “I felt like I was drowning and they were throwing me buckets of water.”

Years later, during the pandemic, he started having intense back pain, but delayed getting help because he feared medical debt.

He waited so long, he said, the pain “broke me as a man because it was so relentless”. When he finally went to a doctor, he said, medical imaging showed that two vertebrae in his lower back had “splintered off”.

Many patients won’t benefit at all from the chain’s decision to remove liens against patients’ homes because they have already paid what they owed by selling their homes, running through savings or, like Ashley, borrowing to pay off the liens.

In a written statement in response to questions from the Guardian, Advocate Health acknowledged that “having medical debt tied to one’s home can be a tremendous burden”. That’s why, it said, it stopped filing new liens against patients’ homes in 2022, and is now in the process of canceling 11,500 debt judgments and liens in five states.

A patient received a letter of cancellation of judgment in October. Photograph: Jesse Barber/The Guardian

“As we look at past practices, it’s important to note that we’ve never initiated the execution of a lien to take anyone’s home,” the statement said. “Legal action was taken on less than .0001% of total patient accounts … We received payment only when a home was sold, using the proceeds to pay off the unpaid account.”

The health system also added: “We recognize that no large organization is perfect or without a need to improve. We also recognize the weight a person can feel when trying to manage the cost and complexity of America’s healthcare system. That’s why our leadership team and teammates are continuing to evolve our practices and strive every day to fulfill our commitments to the communities we serve.”

The health system also said it expanded charity care to include people who earn 300% of the federal poverty level, or around $77,000 per year for a household of three.

In extensive interviews with the Guardian, Advocate Health executives described the hospital chain as a changed organization – one whose leaders want to move on from past practices and do their part to help “improve upon the broken healthcare system in our nation”.

The costs of care

Advocate Health controls 69 hospitals and 1,000 other care sites in six states – serving 5.4 million patients a year in North Carolina, South Carolina, Georgia, Alabama, Illinois and Wisconsin. The industry trade journal Becker’s Hospital Review recently elevated Advocate to No 4 on its rankings of the nation’s largest hospital chains, up from No 7 earlier this year. In November, Advocate reported nearly $26bn in revenues in the first nine months of 2024 – a 13% increase over the same period in 2023. It is the largest employer in both North Carolina and Wisconsin, according to executives.

Atrium hospital in Charlotte, North Carolina. Photograph: Jesse Barber/The Guardian

Atrium Health – the unit of Advocate Health that operates in the four southern states – is run by a local government authority in Charlotte, North Carolina. Atrium has been the subject of government and media scrutiny for more than a year, since a report released by North Carolina’s state treasurer revealed Atrium to be the most litigious hospital chain in the state, taking out thousands of liens against patients’ homes.

Atrium is not alone. Hospitals across the country have come under fire for aggressive billing and collections as an estimated 41% of US adults – 100 million people – struggle with medical debt. At the same time, many health systems, like Advocate Health, have pursued aggressive merger and acquisition campaigns that researchers and lawsuits contend have reduced competition and patient choice in nearly every region of the US.

Last week, the Biden administration announced a new rule that will remove $49bn of existing unpaid medical bills from Americans’ credit reports and, going forward, ban the inclusion of medical debt on credit reports. The new rule finalizes a policy that will bring the number of Americans with medical debt on a credit report from 46 million in 2020 to zero.

“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Vice-President Kamala Harris said in announcing the new rule.

This action comes as insured patients have become the largest group of patients in debt to hospitals and 81% of US adults support medical debt forgiveness. In a Gallup poll released in September, more than two of three respondents said they were very or somewhat concerned a major health event could ensnare them in medical debt, including 62% of Republicans and 71% of Democrats.

Advocate Health quietly stopped filing new lawsuits against patients in late 2022 and 2023. It stopped sending patient accounts to credit agencies in January 2024. .

From 2008 to 2022, North Carolina hospitals that are part of Advocate Health’s Atrium unit sued more than 4,400 patients for at least $74m, records obtained exclusively by the Guardian show. The hospitals pursued these collections even though they represented a tiny slice of Atrium’s revenue and less than 1% of the $8bn that the Atrium unit holds in reserves today.

A Guardian analysis found that most of the more than 1,900 debt judgments that Atrium obtained in Mecklenburg – the county that includes Charlotte – were against patients living in low- and middle-income neighborhoods where people of color make up the majority.

The Guardian identified recent home addresses for patients named in roughly 1,500 of those debt judgments and found that 78% of those patients lived in census tracts where less than half of residents are white. Similarly, 77% of those debt judgments were against patients living in census tracts where the median household income is between $40,000 to $100,000.

Under North Carolina law, a debt judgment is issued by the court when a creditor successfully sues a debtor. If the debtor owns real estate, the debt judgment automatically becomes a lien on that property – preventing the owner from buying, selling or refinancing without paying the debt. Not all of the judgments obtained by Atrium became liens on homes because not all patients owned real estate.

The judgments reviewed by the Guardian ranged from as little as $301 and as much as $783,000.

Although Advocate Health acknowledged it sued patients in every state except Illinois, attorneys for the health system denied the Guardian access to records outside of North Carolina, citing public records exemptions.

The health system is now in the process of canceling judgments against patients. A spokesperson said the system is “very close” to canceling all debt judgments against patients in North Carolina. The spokesperson said it expects to finish resolving judgments in its midwest region by mid-2025.

Robert Montbleau, who lives and works as a cook in Mecklenburg county, said he held garage sales to try to help pay bills he owed to Atrium after struggling with a series of health problems.

But it wasn’t enough.

Atrium secured a debt judgment of more than $33,000 against his family’s home in 2010. Court records show that, with interest, the debt judgment had grown to around $75,000 by the time Atrium announced it would cancel thousands of liens.

Montbleau said US hospitals need to “work with the American people” – “especially the middle class to the lower class” – to make sure patients are not overwhelmed by healthcare costs.

Dale Folwell, who served as North Carolina’s state treasurer until 1 January this year, said the hospital chain’s decision to cancel “the punishing liens they have put on people’s homes” came after “many lives have already been ruined and thousands were thrown into generational poverty”.

Folwell, a Republican who was the state treasurer for the past eight years, said Atrium’s billing and collections tactics helped wreck many patients’ credit records, which made it hard for them to rent housing, get new mortgages or even find affordable cell phone and auto insurance plans.

The health system has said Folwell’s comments are “neither accurate nor fair”.

Advocate Health continues to use collections practices that some consumer rights advocates find troubling. Atrium requires patients in its southern hospitals who want payment plans to establish them with AccessOne, a medical credit card company with interest rates as high as 13%.

A spokesperson for Advocate Health said: “Using AccessOne provides choice for our patients while taking some of the administrative burden off of our teams during the repayment period.” The spokesperson added that AccessOne offers “favorable financing rates” for patients and that the partnership helps to protect “them from paying interest rates in the upper-20% range associated with consumer credit cards”.

Until March 2024, Advocate Health used South Carolina’s department of revenue to garnish state income tax refunds from patients. The health system stopped the practice after the Guardian obtained records showing it collected more than $34m from patients over an eight-year period through the state’s tax garnishment program, which one patient rights group, Consumers for Quality Care, has called “troublesome” and “predatory”. South Carolina is the only state in the nation that allows quasi-governmental healthcare providers to garnish state income tax returns.

In the Carolinas, Georgia and Alabama, Advocate Health’s Atrium unit has also retained the services of debt collection companies, such as Paragon Revenue Group, which received 10% of every dollar paid to the hospital, according to contracts obtained in 2023 by the Guardian.

Advocate Health said it only uses debt collection services when patient accounts are more than 120 days old and, if the accounts are uncollectable, they are returned to the hospital – not reported to credit agencies. It also said it does not pay Paragon 10% of every dollar collected, but did not provide an accurate figure.

The health system also said it was working with its legal team to ensure patients did not suffer tax consequences as a result of the lien cancelations. In some circumstances, debt forgiveness can be counted as income by the IRS.

One patient who received debt relief was Linda Hanner, a 78-year-old widow who worked for 32 years in the mail and printing rooms of Atrium’s Carolinas Medical Center. After she retired, Hanner returned to the hospital for carotid artery surgery and ended up with a bill of $83,036 because she was uninsured.

Linda Hanner’s family called it a “miracle” that her medical debts were canceled, but also said that the lien against her home had made it impossible for many years to access financing to renovate the home to accommodate her health problems. Photograph: Jesse Barber/The Guardian

The hospital sued her and got a lien against her home in 2010. With interest, the judgment grew to more than $188,000 this year. Zillow estimated her home was worth about $296,000 in 2024.

“It’s a very bad situation,” Hanner told the Guardian not long before Atrium announced it was canceling its debt liens. She takes long pauses to breathe in oxygen from the long tube snaked across her living room floor. “There’s no way I can pay it off – I mean, I’m 78-years-old – I’m not going to live to pay an $80,000 debt.”

Although her family called it a “miracle” for the lien to be canceled, they also said that, for 14 years, the lien made it impossible for them to access financing to do much-needed repairs or renovate the home to accommodate Hanner’s chronic obstructive pulmonary disorder and mobility issues.

‘Regular rates’

Along with concerns about its collection practices, Atrium and other units of Advocate Health have also come under scrutiny for the prices they charge for care. The US justice department and the North Carolina attorney general said in 2016 that the chain “has long had a reputation for being a high-priced healthcare provider”.

Lawsuits in North Carolina and Wisconsin alleged that parts of the hospital chain charged patients unfair prices and hidden fees and engaged in tactics that reduce competition from other hospital groups. Some of these cases were settled or dismissed, but some were still pending.

One case currently being fought in federal court alleged that Advocate Health hospitals in Wisconsin and Illinois have used their market dominance to lock in higher prices. The suit claimed, for instance, that a common price for hip replacement surgery at an Advocate Health hospital in Milwaukee in 2022 was $62,538 – more than $21,000 higher than the price at a competing hospital five minutes away.

In court documents, lawyers for the hospitals said the suit mischaracterizes their business practices, pushing a “series of groundless attacks” based on the idea that when it comes to hospital systems, “big is bad”.

Another lawsuit, filed in 2019 in state court in North Carolina, alleged that Atrium hospitals stuck patients with big hidden fees for emergency room visits. The suit – which sought class action status – alleged that an Atrium hospital had charged one patient $1,731 for the treatment and services provided, plus an ER “facility fee” of $2,960, which represented a 171% surcharge “over and above the charges for the specific services he was provided”.

The case was dismissed by a judge who wrote that the ER charges represented “the hospital’s regular rates”, which the patient had agreed to pay when he signed the hospital’s paperwork before receiving treatment. The lawsuit had argued that a patient seeking care amid a medical emergency puts “a great deal of trust and confidence on the good intentions of the hospital to treat him or her fairly and with compassion”.

From one hospital to many

The roots of what would become a national chain go back to a single hospital in Charlotte, at the time a mid-sized city on the northern side of the border separating the Carolinas.

In 1943 North Carolina chartered the Charlotte-Mecklenburg Hospital Authority – a political subdivision that is still Atrium Health’s controlling entity – to run a local whites-only hospital called Charlotte Memorial. The hospital remained segregated until Black patients and doctors were admitted in 1963.

In 1990, Charlotte Memorial Hospital changed its name to Carolinas Medical Center. In 1996, the hospital authority began using the name Carolinas Healthcare System as it was ramping up a campaign of growth and consolidation. It snapped up hospitals, doctors offices and other medical sites in North Carolina, joining a national merger frenzy that has played out among both non-profit and for-profit hospitals.

The chain’s practice of filing lawsuits against its own patients began as early as 2004, according to records obtained by the Guardian.

A Charlotte suburb. Atrium Health filed debt collection lawsuits against thousands of patients in Mecklenburg, the county that includes Charlotte. Most of them lived in low- and middle-income neighborhoods where people of color make up the majority. Photograph: Jesse Barber/The Guardian

One of the North Carolina patients caught in this legal campaign was Carolyn Withers, who ended up in debt to Atrium after going to the emergency room when a spike in her blood pressure made her worry that she was having a heart attack or stroke.

She was unemployed at the time and hospital employees told her she qualified for charity care and her bills would be taken care of, Withers said.

But in 2010 Atrium sued and won a $7,497 judgment against her and her home. Withers said she wasn’t aware of the court judgment against her until 2020, when Atrium representatives filed legal documents to keep the lien in force. By 2024, interest charges on her debt to the hospital had increased the total amount covered by the lien to nearly $17,000.

Withers said she had felt relieved when she got a notice from Atrium in November that the debt and the lien had been cancelled. But she questioned whether Atrium had done enough to make amends for its litigation campaign. “I think there’s more they could do,” she said.

By 2016, Carolinas Healthcare had gained more than half of the local hospital market share in the Charlotte area. That year the system hired a new chief executive, Eugene Woods, who had helped run hospital systems based in Kentucky and Texas. Just before he started his new job, Modern Healthcare magazine honored him, for the third time, as one of the top 25 minority executives in the healthcare industry.

Woods used his platform as the chain’s CEO to speak out about the disparities that harm the health of people of color and people with modest incomes.

“Your zip code and color of your skin should not have a high correlation coefficient to your health,” he later wrote in his 2023 book, Health, Hope, and Healing for All. “Not in this country.”

In 2017, Carolinas Healthcare paid $6.5m to resolve allegations that the system had defrauded the US government by overcharging Medicare and Medicaid for urine drug tests. The lawsuit claimed that the system inflated reimbursements by roughly 400% by billing “moderate complexity” tests as “high complexity” tests.

The hospital system said at the time that it “fully cooperated” in the government’s review and said that the case didn’t involve patient safety or the quality of care – it was “about the interpretation and application of complex and constantly changing billing guidelines”.

Separately, that same year, a US government report found that the system’s flagship hospital – Carolinas Medical Center – had overcharged Medicare on nearly 35% of the reimbursement claims sampled during an audit by the US Department of Health and Human Services. The audit findings indicated that the average overcharge for various kinds of medical services provided to patients was nearly $4,000 per claim.

The hospital system denied the findings, saying the audit was flawed and that the hospital had a strong compliance program.

New name, more problems

In 2018, Carolinas Healthcare took on a new name – Atrium Health – but faced new legal challenges.

In April of that year, more than 90 physicians who had worked for the system in the Charlotte area sued Atrium Health, accusing the regional chain of engaging in “illegal” tactics that stifled competition for medical care.

The doctors were seeking to strike down non-compete clauses that they said the chain was using to block them from breaking away and starting an independent physicians group that would “provide better quality care at lower prices than Atrium”.

The suit highlighted the chain’s immense market power – noting, for example, that Atrium controlled roughly 70% of the Charlotte area’s cardiologists, endocrinologists and pulmonary specialists.

Atrium did not respond in court filings to the allegations in the lawsuit, but agreed to not enforce the non-compete provision. The breakaway physicians opened an independent practice that now has multiple care locations.

Soon after the doctors’ lawsuit was resolved, Atrium settled with the US justice department and North Carolina’s attorney general over allegations it had illegally reduced competition – and consumers’ ability to shop for the best deals on healthcare. The lawsuit had alleged the chain had used its market power in North Carolina to put the squeeze on health insurance companies and negotiate high prices for insured patients.

Under the deal, Atrium agreed to not seek to block insurers from steering their policyholders to other medical providers in the Charlotte region that might charge less. The settlement included no monetary penalties.

In a statement at the time, Atrium noted that it had made no admission of wrongdoing and said it “has always been a champion for patient choice”.

In 2019, Atrium took its consolidation push to a new level, merging with a hospital system in Georgia called Navicent Health. Two years later it merged with another system, Floyd Health, which operated in Georgia and Alabama.

The patients that Atrium was suing during this period of growth included Cathy Rorie, a retired parts manager at a Ford dealership in Anson county, North Carolina, south-east of Charlotte. Her husband said she was two weeks away from qualifying for Medicare when she had a stroke and was airlifted to an Atrium Health hospital in Charlotte.

Faced with huge bills from the hospital, she and her husband, Willie – who had health problems of his own – struggled to keep up with their payments. Finally, he said, he told the hospital: “The well run dry.”

“I had cancer, my wife was up here paralyzed in a wheelchair and the money was gone,” Willie Rorie recalled. “We paid what bills we could pay.”

In February 2021 Atrium obtained a court judgment against their home for $177,298 – more than what records indicated the home was worth.

Cathy Rorie died 17 months later, in July 2022. She was 67.

‘More, better, faster’

A few months before Cathy Rorie passed on, Atrium announced its biggest deal ever – it was expanding into Illinois and Wisconsin by merging with a midwestern chain, Advocate Aurora Health. The combined system was renamed Advocate Health, with Woods ultimately taking over as the combined organization’s CEO.

In announcing the deal, Woods said the goal wasn’t to get bigger for the sake of getting bigger – it was to use that size to make more investments in employees and communities and fight health disparities.

“Size will enable us to serve our communities,” he said. “We’re just looking to do that more, better, faster.”

An Atrium Health sign at a construction site in Charlotte, North Carolina, says, ‘building tomorrow’s healthcare for all … starts here’. Photograph: Jesse Barber/The Guardian

Like Atrium hospitals in North Carolina, the Wisconsin and Illinois healthcare providers that joined the new, larger non-profit chain as a result of the 2022 merger have also been accused of charging patients unfair prices.

A lawsuit filed in February 2024 in federal court in Wisconsin said the chain’s Wisconsin operations had imposed “eye-watering prices” on health insurers and patients by buying up competing hospitals and care sites and using their market clout to force insurers to sign “secret” contract terms that make it hard for the insurers to steer patients to more affordable providers.

The named plaintiffs in the suit – which was seeking class action status – were Patrick and Debra Shaw and their three children, who claimed that they had received “lackluster treatment at high cost” at Advocate Health facilities.

The lawsuit claimed that when Patrick Shaw, a golf course superintendent, got a colonoscopy, Advocate Health double-charged him for two rooms and two anesthesiology fees – leaving him $4,000 in out-of-pocket costs that took him the better part of four years to pay off.

In another instance, the suit alleged that Debra Shaw and their 24-year-old daughter Haley were “belittled” by medical staff when the mom brought her daughter in with a 104-degree temperature and ear, neck, head and back pain. Only after they left the ER and went to an urgent care center was Haley correctly diagnosed with a severe ear infection, the legal complaint alleged. Advocate Health charged her about $1,000 in out-of-pocket expenses for the “inadequate care” she was provided, the suit said.

In a response released in February, an Advocate Health spokesperson said: “This lawsuit has no merit, and we categorically reject these baseless claims. Health care providers and health insurers have worked together in recent years to offer more choices for members and patients.”

‘I may never dig out’

In North Carolina, billing and collections practices of Advocate Health’s Atrium unit began getting increased attention in 2023 after Folwell, the state’s treasurer at the time, published a report revealing that “litigious” hospitals in the state had filed more than 7,500 lawsuits in just five years. The study found that Atrium was the most aggressive of these hospitals, filing nearly 42% of the collection suits during that span.

Soon after that report was released, the Guardian highlighted the story of two North Carolina patients who had run up tens of thousands of debt to Atrium: Sandra Belk, who worked in the shoe department at Macy’s, and her husband, Terry, who worked as a used-car salesman.

The Belks both had health insurance, but ended up owing the hospital more than $23,000 for her breast cancer treatment and $7,000 for his prostate cancer treatment. A chunk of their debt ended up as a deed of trust, a legal instrument the Belks agreed to sign to end collections, and liens against their home. Fearing another lawsuit , Terry Belk also paid off debt by using an AccessOne medical credit card.

Sandra died in 2013.

“She had months to live, and they were suing her right along with me,” Terry Belk said.

Terry Belk plans to go to the North Carolina legislature to push for a health consumer rights bill, which he said will help establish ‘people’s right to exist and be free of predatory collections’. Photograph: Juan Diego Reyes/The Guardian

After that story was published, the Guardian filed a series of public records requests to Atrium asking for documents relating to its lawsuits, its charity care program and related issues. The chain provided some of these records – including a spreadsheet cataloging nearly 4,500 lawsuits – but refused to provide some of the requested documents.

This October Terry Belk’s story got renewed national attention through a report by NBC News. Two weeks later, Advocate Health announced it was wiping away the debts of thousands of patients like Belk.

As part of that announcement, Advocate Health said it had increased its charity care threshold to 300% of the federal poverty level. An uninsured family of three earning up to around $77,00 qualifies automatically, the hospital chain said. Patients with commercial insurance must still fill out an application

“We believe our financial assistance program is now among the most generous in the nation and Advocate Health is committed to being part of the solution to address the medical debt dilemma so many people are facing today,” Brad Clark, chief financial officer of Advocate Health, said in announcing the initiative.

Advocate Health also said it had signed on to a new North Carolina government initiative that will reward hospitals that provide debt forgiveness with higher reimbursements from Medicaid, the government-sponsored health insurance program for low-income patients.

Ge Bai, a healthcare accounting expert at Johns Hopkins University, said the initiative is an exercise in “political theater” that shifts the costs of cancelling medical debt to taxpayers. It would also incentivize hospital chains to keep growing and do more mergers, Bai said. A 2021 report by the state treasurer’s office estimated that Atrium’s spending on charity care equaled less than 60% of the value of the tax breaks it received as a non-profit in 2019-2020.

Terry Belk, the Atrium patient whose own experiences transformed him into an unofficial spokesperson for people facing medical debt, plans to go to North Carolina’s legislature to push for a health consumer rights bill, which he said will help establish “people’s right to exist and be free of predatory collections”. The legislation would, among other provisions, shield family members from medical debts owed by spouses or parents.

Belk is still selling cars, at age 68, thanks to the cascade of financial effects his medical debt has had on his life.

“I may never dig out,” he said.

Montbleau, the patient who held garage sales to pay down his debts to Atrium, turned 69 last year and is also still working full-time. He cooked for 1,000 people, he said, on a recent busy Saturday at the breakfast and lunch spot where he works.

He has been toiling in restaurants since he was 16. He would have retired four years ago if not for his struggles with medical bills, Montbleau told a reporter just before Thanksgiving.

“I’ve had bad luck with the hospital and it’s put me into a kind of a depression,” he said.

• Will Craft and George Joseph contributed to this story