As their revenue from investments vanishes, U.S. community hospitals face worsening financial pressures as shortfalls continue to increase in government reimbursements and bad-debt rates climb higher, two analyses released by the American Hospital Association show.
The amount of underpayment by Medicare and Medicaid programs increased more than eightfold in eight years, growing from $3.8 billion in 2000 to $31.9 billion in 2007, the most recent year in which figures are available, the analysis shows. Those figures were computed using actual care costs, not charge rates. Hospitals were paid 91 cents for every dollar they spent on Medicare patients, and 88 cents for every dollar they spent on Medicaid patients.
Uncompensated-care costs at community hospitals also continued to climb in 2007, reaching 5.8% of all expenses posted, the analysis shows. The figure is not expected to improve when 2008s statistics come in, as uncompensated care is driven partly by unemployment rates and the corresponding lack of insurance, said Caorline Steinberg, AHA vice president of trend analysis. Uncompensated care is defined as bad debt plus charity care, using actual care costs. Community hospitals include nonfederal, short-term, general and specialty hospitals.
Steinberg said the modest revenue growth in 2007 was a product of increases in nonoperating revenue such as investments, which have in many cases already been wiped out by the market downturn. The concern is, as those (nonoperating revenue) evaporate, the underpayments from Medicare and Medicaid will be more of a factor, she said. -- by Joe Carlson