Although Pennsylvania hospitals shaved expenses and padded profits in 1994, charity care represented less than 1% of total expenses, a new report shows.
The figures are included in data released by the Pennsylvania Health Care Cost Containment Council. The council's latest "Hospital Financial Report" says Pennsylvania hospitals provided $85.5 million in charity care in 1994, or just 0.57% of the facilities' total operating expenses.
The charity-care figures, extracted from hospitals' audited financial statements, exclude bad debt. The report said 127 of the state's 178 acute-care hospitals reported charity-care amounts in their financial statements.
When bad debt is factored in, the amount of uncompensated care provided by Pennsylvania hospitals rises to 2.66% of total expenses.
By comparison, the American Hospital Association reported this month that hospitals provided $16 billion in "unsponsored care" in 1994, including charity care and bad debt offset by tax subsidies for indigent care (April 22, p. 2). That amounts to 5.9% of total expenses.
But according to the Hospital Association of Pennsylvania, measuring charity care as a percentage of expenses yields a skewed result. The "truest picture" of hospitals' provision of care to the poor is bad debt and charity care as a percentage of net income, said Lou Gable, a spokesman for the association. In 1994, charity care represented 9.8% of net income, while charity care and bad debt combined accounted for a whopping 53.5% of net income.
One reason charity care as a percentage of expenses appears low may be that Pennsylvania's Medicaid program is more generous than some states'. According to the Kaiser Commission on the Future of Medicaid, Pennsylvania spent $4,589 per Medi-caid beneficiary in 1993, the latest available data, compared with the national average of $3,895.
Gable also noted that except for a minor subsidy for high Medicaid hospitals, the state does not reimburse hospitals for their charity-care expenses as some states do.
And although the state health department had no figures on the number of uninsured in the state, a spokesman noted that Pennsylvania covers more than 49,000 children through age 15 under a special health insurance program.
The council's report showed hospitals' operating expenses dipped to $15 billion in 1994 from $15.1 billion in the previous year. It's the first time since the council began collecting data that operating expenses have declined.
Net margins for hospitals with 100 beds or more increased to 3.1% from 2.3%. For smaller hospitals, margins increased to 1% from 0.8%.