Hospitals' uncompensated-care burden remained stable in 1993, casting doubt on a new study that says cuts in budgeted Medicare and Medicaid spending will reduce hospitals' financial ability to provide charity care.
The American Hospital Association last week released its latest uncompensated-care statistics at the request of MODERN HEALTHCARE.
The release follows the April 21 publication of a new Rand Corp. study that predicts gloomy days ahead for poor people who need hospital care if Congress reduces budgeted Medicare and Medicaid spending and the effects of managed-care continue to exert downward pressure on hospital prices.
The AHA data reveal that hospitals' uncompensated-care burden hasn't changed much in the past decade despite wavering Medicare and Medicaid payments and tremendous growth in managed-care market penetration.
Hospitals' incurred $16 billion in uncompensated-care costs in 1993, according to the AHA. That's up 8.8% from $14.7 billion in 1992.
The AHA figures are based on its annual survey of 5,300 acute-care hospitals. Uncompensated-care costs combine hospitals' charity-care and bad-debt expenses.
The AHA also reports hospitals' "unsponsored" care costs, which are uncompensated-care costs offset by tax subsidies or gifts that facilitate care for the poor. Hospital unsponsored care rose 8.4% to $12.9 billion in 1993 from $11.9 billion in 1992, the AHA reported.
Despite the increase in actual dollars, hospitals' commitment to uncompensated and unsponsored care remained stable as a percentage of their total expenses.
For example, hospitals' 1993 uncompensated-care costs represented 6% of total hospital expenses, up slightly from 5.9% in 1992 but matching the same percentage devoted to uncompensated care in 1984 (See chart).
Meanwhile, hospitals' 1993 unsponsored-care costs represented just 4.8% of total hospital expenses, matching hospitals' 1992 commitment.
The AHA data indicate that hospitals' commitment to care for the poor-for better or worse-hasn't fluctuated.
That information casts doubt on the conclusion of the new Rand study, which suggests that hospitals will reduce their levels of uncompensated care to counter payment shortfalls from Medicare and Medicaid and price discounts negotiated by managed-care plans.
The study, funded by a grant from the Robert Wood Johnson Foundation, examined changes in the levels of uncompensated care provided by California hospitals from 1980 through 1989.
The study found that hospitals in highly competitive markets or facing greater fiscal pressures from Medicare and Medi-Cal, the state's Medicaid program, reduced their uncompensated-care loads more than did hospitals without similar market or fiscal constraints.
"These findings suggest that the financial constraints placed on hospitals during the past decade in an effort to encourage greater efficiency and slow the growth of hospital costs may undermine the ability of hospitals to support charity care," the researchers said. "As these pressures intensify and spread to other parts of the country, access to care for uninsured and indigent persons may be jeopardized unless alternative sources of financing are identified or universal coverage is established."
The study appeared in the Spring 1995 issue of Health Affairs, published by Project HOPE.