Report: Hospitals Turn to Litigation Financing as Insurance Payouts Slow

Thanks to a growing number of healthcare lawsuits, litigation financers could see new demand from hospitals, Bloomberg said in a Tuesday (Oct. 1) report.

The litigation finance industry is worth $15 billion and is one where investors pay for lawsuits in exchange for any award or settlement if a case is successful.

“There is such enormous economic pressure in the healthcare industry that it leads to a fair bit of bad behavior and quite a significant number of disputes,” Christopher Bogart, chief executive officer of litigation funder Burford Capital, said during a media briefing on Tuesday, according to Bloomberg.

“Insurance companies are increasingly difficult in paying healthcare claims,” he added. “That’s probably true for you personally, but it’s also true for corporates.”

Bogart said hospitals seeking financing for litigations is a “relatively new” trend, but as insurers increasingly hold back claims payments, healthcare institutions have bundled their cases to bring one large arbitration or litigation action, according to Bloomberg.

As PYMNTS Intelligence has found, healthcare organizations also face financial losses because of outdated accounts receivable (AR) processes.

“Pains and Gains: Conquering Healthcare’s Payment Woes,” a PYMNTS Intelligence collaboration with American Express, highlights key inefficiencies in healthcare payments and discusses how digital transformation can provide relief.

According to the study, over half of health organizations’ payment leaders are concerned about delays in processing claims and payments. While 80% believe streamlining these processes are crucial, only 53% have automated their workflows, pointing to a reliance on manual methods that can result in expensive mistakes and lost revenue.

Additionally, a reliance on traditional paper statements escalates collection delays.

PYMNTS Intelligence found that nearly 70% of providers still use paper for patient communications, while 50% cited that as a primary concern in managing revenue cycles. This practice hampers timely collections and prevents healthcare providers from tapping into the efficiency gains offered by digital solutions.

“To navigate these complexities and reap the rewards of modernization, the sector must embrace digital transformation, which promises to enhance efficiency, improve patient experiences, and secure financial stability,” PYMNTS wrote.