Hospitals' uncompensated-care costs grew at the slowest rate in a decade in 1995, according to figures from the American Hospital Association.
The AHA released the figures to MODERN HEALTHCARE*last week.
The small growth in expenditures on care to the poor contributed to the hospital industry's record profits that year. In 1995, aggregate profits generated by the nation's acute-care hospitals jumped nearly 24% to slightly more than $17 billion (Feb. 3, p. 2).
According to the AHA, hospitals incurred $17.5 billion in uncompensated-care costs in 1995, up just 4.2% from 1994's total of $16.8 billion, the smallest increase since 1986, AHA data reveal.
During that 10-year period, the average annual increase in hospitals' uncompensated-care costs was 8.7%.
Hospitals' uncompensated-care costs represented 6.1% of hospitals' total costs in 1995, the same share as in 1994. In fact, the amount of expenditures devoted to care for the poor has hovered around 6% of hospitals' total costs for more than a decade.
Uncompensated care is the total of charity care, or costs of care given without expectation of payment, and bad debt, or costs of care given for which payment was expected but not made.
In past years, the AHA calculated what was essentially the hospital industry's bottom-line figure on spending on indigent care, a figure known as "unsponsored care."
To derive its unsponsored-care figures, the AHA added any Medicaid payment shortfalls to hospitals' charity-care and bad-debt costs and offset that with any special tax subsidies hospitals received for caring for the poor. That calculation typically resulted in a lower figure on spending on care for the poor than the total of uncompensated-care costs.
For example, the AHA said hospitals' uncompensated-care costs totaled $16.8 billion in 1994. After throwing in Medicaid and tax subsidies, that figure dropped to $16 billion (April 22, 1996, p. 2).
But this year, the AHA stopped determining a figure for unsponsored-care and will release only the higher uncompensated-care amount.
"The numbers we're using now are a more accurate reflection of what's going on out there," said Richard Wade, the AHA's chief spokesman. "Some of those subsidies aren't going to charity care."