In 1996, a year of record profits, the nation's hospitals posted their smallest increase in uncompensated-care costs in more than a decade, new data show.
That information comes from statistics compiled by the American Hospital Association. Uncompensated-care costs rose to $18 billion in 1996, an increase of less than 3% over 1995 when hospitals shouldered $17.5 billion in costs, according to the AHA.
While the cost of caring for the poor increased just slightly, hospitals in 1996 saw their aggregate profits jump nearly 25% to an industry record of more than $21 billion (Jan. 12, p. 2).
The AHA released the uncompensated-care information last week after MODERN HEALTHCARE requested it.
Despite the slight increase in actual costs, the level of uncompensated care as a percentage of expenses remained flat at 6.1%. That percentage has remained unchanged since 1994.
"This is not uncommon in a time of a good economy," said Richard Wade, the AHA's senior vice president for communications. Wade said the robust economy is creating new jobs, which means more people have insurance and are able to pay for their care. Also, he said state Medicaid programs are expanding, and more of those patients are moving into managed care, which provides preventive care.
But 41.7 million people in this country are still uninsured, according to a recent report from the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry.
The hospital data on uncompensated-care costs include charity care and bad debt. Charity care is care given without the expectation of payment; bad debt is care for which payment is expected but never received. The AHA data do not give a breakdown of charity-care costs vs. bad debt.
But hospitals shouldn't expect the slow growth in their uncompensated-care costs to continue, said Bill Schaude, president of Chamberlin Edmonds, an Atlanta-based firm that helps hospitals reduce those costs by getting people signed up for government insurance programs. He predicts an eventual downturn in the economy. Couple that with aging baby boomers, and uncompensated care costs will go up.
Schaude said hospitals can prepare by working to qualify people for government services and coverage. "The fact that we have a flat uncompensated-care line indicates that now is the time to take action and not be lulled to sleep by it," he said.
The AHA already is taking steps that could rein in uncompensated care. It has embarked on a Campaign for Coverage that seeks to reduce by 4 million the number of people without health insurance.