Uncompensated Care Data Shows Increase

17 January 2013

Utah Hospital Association, in conjunction with the American Hospital Association, has been gathering information on the level of uncompensated care burden on Utah’s hospitals. Uncompensated care refers to those services for which no payment was received from the patient or insurer. It is the sum of a hospitals’ “bad debt” and the charity care it provides.

Charity care is care for which hospitals never expected to be reimbursed. A hospital incurs bad debt when it cannot obtain reimbursement for care provided; this happens when patients are unable to pay their bills, but do not apply for charity care, or are unwilling to pay their bills. Uncompensated care excludes other unfunded costs of care, such as underpayment from Medicaid and Medicare.

Utah’s uncompensated care numbers have risen steadily over the past few years. In 2008, uncompensated care for Utah’s hospitals totaled $213,272,880. By 2010 that number had risen to $262,291,161, an 18.6 % increase.

So what does this mean for Utah’s hospitals? Certainly, increasing levels of uncompensated care threaten the financial health of our healthcare institutions. While Utah has been fortunate when compared to other states, our ability to absorb double digit increases in uncompensated care is unsustainable. Theoretically, as elements of the Affordable Care Act kick in, such as the individual mandate, the level of uncompensated care may go down. However, the “proof is in the pudding” as other financial pressures, such as reduced reimbursement, could adversely affect a hospital’s financial outlook.

Utah’s hospitals are committed to providing quality care to the communities they serve. However, without an ongoing commitment to appropriately fund safety net programs such as Medicaid and Medicare, the long-term financial outlook for Utah’s hospitals will be imperiled.

By Rod Betit