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How Private Equity Profits from Aggressive Medical Debt Collection

August 24, 2021

How Private Equity Profits from Aggressive Medical Debt Collection

In the United States’ for-profit healthcare system, large medical debt is an unfortunate reality for many. Medical debt can have a deleterious effect on a family’s ability to make ends meet, much less plan for the financial headwinds of the future.[1] To make matters worse, patients often must deal with medical debt collectors known as revenue cycle management (RCM) companies, some of which use harassment and aggressive collection tactics to collect debts from patients.[2]

Although harassment and aggressive debt collection practices are issues that pervade the debt collection industry,[3] there are a few RCM companies that stand out amongst the rest in terms of consumer complaints.[4] Private equity firms – such as Platinum Equity, Clearlake Capital Group and NexPhase Capital – own some of the RCM companies with the highest numbers of complaints,[5] raising questions about whether there is a link between private equity-owned RCM companies’ use of aggressive debt collection practices and private equity firms’ focus on returns.

What is Revenue Cycle Management?

The Healthcare Business Management Association describes RCM as “the administration of financial transactions that result from the medical encounters between a patient and a provider, facility, and/or supplier . . . [Such] transactions include, without limitation, billing, collections, payer contracting, provider enrollment, coding, data analytics, management, and compliance.”[6] RCM companies specialize in the collection of medical debt, a service for which cash-strapped hospitals pay to outsource.[7] They are often paid a percentage of the debt they collect for a hospital, and thus are incentivized to aggressively pursue patients using a variety of tactics, sometimes running afoul of federal laws such as the Federal Debt Collection Practices Act or the Telephone Consumer Protection Act.[8]

RCM companies advertise themselves as more efficient and advanced than in-house debt collection operations at hospitals.[9] There is evidence to support this contention, as many RCM companies have invested heavily in updating and scaling their collection services through technology.[10] This has led to a surge in demand from hospitals for RCM services, which has made this segment of the industry very profitable and attractive for investors.[11] As a result, private equity firms have invested heavily in RCM companies,[12] and have possibly contributed to an increase in aggressive debt collection activity.[13]

Private Equity’s Inroads

Private equity firms have had a foothold in the RCM sector for decades.[14] Using “roll-up” strategies to acquire smaller RCM companies – a hallmark of private equity activity – private equity firms have begun to consolidate the RCM market into a few large medical debt collection behemoths.[15] To illustrate the scale of private equity activity in the RCM sector, private equity firms were responsible for almost 32 percent of the deals concerning RCM companies between 2015 and 2016.[16] Anticipated growth in the sector appears to be a driving force behind increasing private equity interest; the global RCM outsourcing market is expected to increase from $11.7 billion to $23 billion between 2017 and 2023.[17]

Analysis of Consumer Financial Protection Bureau (CFPB) data reveals that private-equity-owned RCM companies face high volumes of debt-related consumer complaints, particularly related to attempts to collect a debt that is not owed, either because it had already been paid, was the wrong amount, or targeted the wrong individual.[18]

Transworld Systems – Platinum Equity and Clearlake Capital Group

Transworld Systems Inc. (TSI) is the largest technology-enabled provider of accounts receivable management services in the United States,[19] and is known for its aggressive debt collection tactics.[20] A 2017 report by Frontier Group and U.S. PIRG Education Fund about RCM companies listed TSI as the top RCM company for consumer complaints regarding debt collection practices.[21] However, TSI’s owners, Platinum Equity and Clearlake Capital Group, have largely escaped scrutiny.[22]

The Private Equity Stakeholder Project reported on TSI’s debt collection activity and connections to private equity in 2019.[23] In addition to the more than 4,600 complaints against the company between the time of Platinum Equity’s acquisition and the time of that report,[24] TSI also experienced controversy such as:

  • A fine from the Consumer Financial Protection Bureau (CFPB) in the amount of $2.5 million for illegal student loan debt collection lawsuits.[25]
  • Aggressively pursuing students’ families for school-lunch debt in Rhode Island.[26]
  • A finding by New York Attorney General Letitia James that TSI violated multiple federal and state consumer protection laws by making false, misleading, and deceptive statements in National Collegiate Student Loan Trusts (one of their clients) lawsuits and in communications with borrowers, and for filing these lawsuits beyond the applicable statute of limitations.[27]

Since Platinum Equity’s acquisition of TSI in November 2014, the company has also experienced a large volume of medical debt collection complaints. Moreover, since its recapitalization by Clearlake Capital Group in May 2018, the consumer complaints against TSI concerning medical debt have increased after ebbing in 2019:[28]

  • 2015: 329 complaints.
  • 2016: 300 complaints.
  • 2017: 332 complaints.
  • 2018: 287 complaints.
  • 2019: 183 complaints.
  • 2020: 233 complaints.
  • 2021: 154 complaints as of August 2021.

Out of the 6,819 total complaints levied against TSI since Platinum equity first acquired it in November 2014 to the date of this blog post, 1,859 were for medical debt (27.3%).[29] The increase of medical debt collection complaints from 2019 to 2020 suggests that TSI’s medical debt collection practices may have escalated in their intensity during the height of the COVID-19 pandemic. If trends remain the same, TSI is on track to outpace 2020’s complaints in 2021.

Healthcare Financial Services (HCFS) – Abry Partners, Silversmith Capital Partners, and SV Health Investors

HCFS is an RCM company owned by private equity firms Abry Partners, Silversmith Capital Partners, and SV Health Investors. Abry, the majority owner, acquired HCFS in August 2020 as an add-on acquisition through its portfolio company Centauri Health Solutions.[30] HCFS describes itself as “benefit[ting] hospitals and health systems by recovering costs through scrubbing, screening and prompt pay remittance and it thrives on using advanced technology with an emphasis on patient advocacy.”[31]

HCFS’ professed emphasis on patient advocacy is at odds with the fact that patients’ complaints about its debt collection practices have increased substantially over the last two years, including during the COVID-19 pandemic:[32]

  • 2019: 255 complaints.
  • 2020: 299 complaints.
  • 2021: 257 complaints as of August 2021.

Based on the 2021 numbers the company is, like TSI, on track to surpass its 2020 record this year as well. As an illustration of private equity’s roll-up strategy, HCFS was one of a few RCM companies that Centauri Health Solutions has recently acquired, the others being AppRev, a healthcare revenue cycle analytics company, and IHMS, a hospital revenue cycle management services provider.[33]

CMRE Financial Services (CMRE) – NexPhase Capital

CMRE is another private equity-owned RCM company that has historically experienced a high volume of complaints concerning its debt collection practices.[34] Meduit, a company owned by private equity firm NexPhase Capital, acquired CMRE in February 2020.[35] There have been at least six class action lawsuits filed against CMRE since it was acquired by Meduit, alleging violations of the Telephone Consumer Protection Act,[36] Fair Debt Collection Practices Act,[37] and Fair Credit Reporting Act.[38] CMRE has experienced an uptick in consumer complaints filed with the CFPB as well:[39]

  • 2019: 116 complaints.
  • 2020: 135 complaints.
  • 2021: 121 complaints as of August 2021.

Like Transworld and HCFS, CMRE experienced an increase in medical debt collection complaints during the COVID-19 pandemic and is on track to see an increase in 2021 as well.


As Americans continue to deal with rising medical debt, stakeholders in the healthcare industry, the government and the public should take a closer look at the connection between private equity firms and the aggressive debt collection practices of their RCM portfolio companies.

Aggressive medical debt collection, and medical debt itself, is a symptom of a larger problem in the United States’ healthcare system that allows profit driven incentives to corrupt the primary goal of providing quality care to its citizens. While many other advanced economies have adopted universal healthcare systems that effectively eliminate or minimize individual medical debt,[40]the US healthcare system as currently structured provides a fertile market for companies such as TSI, HCFS, and CMRE and their private equity owners to maximize returns for investors at the expense of healthcare consumers.

[1] Kliff, Sarah, and Margot Sanger-Katz. “Americans’ Medical Debts Are Bigger than Was Known, Totaling $140 Billion.” The New York Times, 20 July 2021,

[2] Weissman, Gideon, et al., Frontier Group and U.S. PIRG Education Fund, April 11, 2017, Medical Debt Malpractice: Consumer Complaints About Medical Debt Collectors, and How the CFPB Can Help, p. 5,


[4]Id. at p. 16.

[5]Id.; Pitchbook profiles for Transworld Systems, Inc., HCFS, Inc. and CMRE Financial Services, Inc., accessed August 2021 (The three companies profiled in this post – Transworld Systems, Inc., HCFS, Inc. and CMRE Financial Services, Inc. – are all owned by private equity firms, either directly or through private equity-owned subsidiaries.)

[6] “Medical Billing & Revenue Cycle Management.” Healthcare Business Management Association, 3 May 2018,

[7] Appelbaum, Eileen, and Rosemary Batt, Center for Economic and Policy Research, March 11, 2020, Private Equity Buyouts in Healthcare: Who Wins, Who Loses, p. 78,

[8]Id., at pp. 88-89.

[9]Id., at p. 78.



[12]Id., at p. 79.

[13] Webb, Olivia, “Private Equity in: Revenue Cycle Management.” Acute Condition, Acute Condition, 15 Oct. 2020,

[14]See Applebaum and Batt, Private Equity Buyouts in Healthcare, at p. 76.

[15]See Webb, supra, note 14.

[16]See Applebaum and Batt, Private Equity Buyouts in Healthcare, at p. 80.

[17]Id., at p. 79.

[18]See Weissman, Gideon, et al., Medical Malpractice, at p. 16.

[19] “Transworld Systems Inc. Completes Acquisition of Account Control Technology Holdings, INC., Cementing the Company’s Position as the Largest Accounts Receivable Management (ARM) Company in the United States.” PR Newswire, 4 June 2021,

[20] Fitzpatrick, Edward, “Two Rhode Island Districts Turn to Collection Agencies to Collect School Lunch Debts – The Boston Globe.”, The Boston Globe, 26 June 2019,

[21]See Weissman et al., Medical Debt Malpractice, at. P. 16.

[22]See Pitchbook profile for Transworld Systems, Inc., accessed August 2021.

[23] Baker, Jim, Private Equity Stakeholder Project, 2019, Platinum Equity-Owned Transworld Systems Fined $2.5 Million for Illegal Student Debt Collection Lawsuits, Draws Thousands of Consumer Complaints,



[26]See Fitzpatrick, supra, note 21.

[27] “Attorney General James Stops Debt Collection Company from Unlawful Practices Harming Thousands of Student Borrowers.” 14 Sept. 2020,

[28] CFPB Consumer Complaint Database, accessed August, 2021.


[30] Centauri Health Solutions Announces Acquisition of HCFS.” 19 Aug. 2020, HCFS was renamed Centauri Health Solutions after it was acquired by Centauri. For simplicity, we will refer to it here as HCFS. 

[31]See Pitchbook profile for HCFS, Inc., accessed August 2021.

[32] CFPB Consumer Complaint Database, accessed August, 2021.

[33]See Centauri Health Solutions Announces Acquisition of HCFS, supra, note 31.

[34]See Weissman et al., Medical Debt Malpractice, at. P. 16.

[35]See Pitchbook profile for CMRE Financial Services, Inc., accessed August 2021.

[36] Dina St. George V. CMRE Financial Services, Inc., 8:21cv748, April 20, 2021; Trim V. CMRE Financial Services, Inc., 3:20cv481, March 13, 2020.

[37] Gardenhire V. CMRE Financial Services, Inc., 2:20at284, March 19, 2020; Walker V. CMRE Financial Services, Inc., 3:20cv2218, November 13, 2020; Wood V. CMRE Financial Services, 3:20cv1446, December 23, 2020.

[38] Trim V. CMRE Financial Services, Inc., 3:20cv451, March 10, 2020.

[39] CFPB Consumer Complaint Database, accessed August, 2021.

[40] “Medicare-for-All Prevents Medical Bankruptcies.” Public Citizen, 27 Apr. 2019, (“A UK resident recently commented on their health care system: ‘You don’t worry about healthcare, ever, for any reason. It’s just there. Like the police or the fire department. There are no bills, no paperwork, no deductibles, no insurance companies to deal with, no ‘patient statements,’ no risk of going bankrupt if you get the ‘wrong’ disease.’”).

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