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Of Interest

How healthcare providers make, spend, borrow and invest money.
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By Melanie Evans

A closer look at hospital write-offs

The American Hospital Association released its yearly look at what hospitals do not get paid. The aggregate amount for nearly 5,000 hospitals was $39.3 billion. But what about hospitals that spend the least? What about those that spend the most? Or how about hospitals at the median?

The trade group reported unpaid medical bills, in aggregate, totaled 5.8% of hospital expenses. The association's data included costs reported by 4,985 hospitals for the year 2010.

I don't have the trade group's underlying data. But there is now another source for a close look at hospital budgets for nearly six out of 10 of U.S. hospitals. Not-for-profit hospitals must now publicly report various costs for which they do not get paid. Such expenses are central to an ongoing policy debate over whether not-for-profit hospitals earn tax breaks by giving enough back to communities.

Modern Healthcare, using data provided by Guidestar, analyzed costs reported by at least 1,800 hospitals for the first time. Hospital figures for tax year 2009 have become public throughout the last year.

There are two categories of unpaid medical bills. Hospitals write off bills for patients who cannot afford to pay, which is known as charity care. Other patients are expected to pay but do not. This is known as bad debt. The American Hospital Association includes both in its figure and contend both reflect one way the industry subsidizes U.S. healthcare. (Not everyone agrees that patients who skip out on bills should be considered a subsidy.)

Here's another look using the Guidestar data:

Modern Healthcare reported charity-care spending in December. Here's a recap:

The bottom 25% of hospitals spent 0.69% or less of budgets on charity care and the median hospital spent 1.52%. The top 25% reported spending 2.73% or more of expenses on charity care.

And here is a similar breakdown for bad-debt numbers:

The bottom 25% of hospitals reported spending 1.43% or less of expenses toward bad debt. The median hospital reported bad debt totaled 2.45% of expenses. And the top 25% of hospitals spent 3.89% or more of expenses on bad debt.

You can follow Melanie Evans on Twitter: @MHmevans.

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