Hospital-owned collection agencies: concerns and considerations

Two factors can affect the desirability of a hospital owning and operating a collection agency--the Internal Revenue Code and the Fair Debt Collection Practices Act. From a tax code perspective, the hospital that elects to own its own collection agency cooperatively will have an advantage over the hospital that has its own fully owned subsidiary that collects accounts for other hospitals. From the perspective of the Fair Debt Act, in either case, the hospital must take great care to see that the provisions of the act are followed.