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Healthcare Client Payment Defaults on the Rise

By Bill Josey        Contact: wjosey@staffinglaw.com

I continue to see cases involving nonpayment of large sums by healthcare clients. As I have mentioned before, the best way for a client to get a free loan is to hire a staffing firm that allows them to "borrow" free labor indefinitely. According to a September 2022 Kaufman Hall study found on the website of the American Hospital Association, U.S hospitals were expected to lose billions in 2022, with no end in sight in 2023. Between inflationary pressures and fixed reimbursements, hospitals are caught in a financial squeeze.

A recent example is Medex Staffing Solutions v. Steward Health Care Network, a Texas Federal Court case. Steward is one of the largest hospital chains in the US, with 39 community hospitals across nine states and more than 43,000 employees.  Yet the company (technically known as an Accountable Care Organization) hasn't paid Medex since early 2022. On April 19, 2023, Medex finally had enough and filed suit for past due invoices totaling $564,996.01. You can read the Complaint below.

The takeaway is simple. Watch that AR. Don't loan your clients free labor well past the agreed due date for payments, while of course following all contractual terms relating to notice before taking any action.