As a spectator to this, I have to say I find it pretty amusing how confidently incorrect you are.
Your link is talking about banks having cash on hand, but the person you're trying to argue with was talking about accounting practices.
A lender has a finite amount of money it can lend. Whether that money is transferred electronically or physically is irrelevant.
A lender uses a credit score as a tool to see whether the person can be trusted to pay back the loan, because people who default usually end up costing the company money.
It's more of a metric to see if a person has a history of making poor financial decisions rather than a way to see what someone's disposable income is.
This is why medical debt is a bad metric. It doesn't give any insight into an individuals financial decisions, because the individual almost never chooses to go into debt.
Even if a person paid off their medical debt through a collections agency, it can still be on their report up to 7 years later.
They didn't have a pediatric orthopedist there, and for some reason that was necessary for a broken arm.