Slide #1:
What is uncompensated care?
- Definition: Care provided by hospitals or other providers that is not paid for directly by patients or insurers
- Includes charity care (furnished without expectation of payment) and bad debts (provider has unsuccessfully attempted to collect)
- Includes entire or partial bills from the uninsured as well as unpaid copayments and deductibles
Slide #2:
What is uncompensated care? (continued)
Uncompensated care does not include:
- The contractual allowances of government and private insurers
- Lack of Medicaid payment for days beyond a length of stay limit
- Courtesy discounts for employees, students, members of religious orders, etc.
Slide #3:
How is uncompensated care measured?
- Hospitals measure their uncompensated care at charges (revenue forgone)
- Policymakers prefer a measure of costs
- Useful computed variables:
- Uncompensated care costs as a percent of total costs
- Share of uncompensated care costs covered by government subsidies
- Uncompensated care losses as a percent of total costs
Slide #4:
How much uncompensated care do hospitals provide?
- Uncompensated care costs: $21.6 billion and 6.1 percent of total costs
- Uncompensated care losses: $19.0 billion and 5.3 percent of total costs
Slide # 5
Trend in Uncompensated Care Costs and Losses
This chart contains information on uncompensated care (UC) costs and losses as a percent of hospital costs for the time period 1984-2000. The years and their corresponding value of UC costs and UC losses as a percent of total hospitals costs, respectively, are as follows: 1984: 6.0%, 4.6%; 1988: 6.2%, 4.8%; 1992: 6.0%, 4.9%; 1996: 6.1%, 5.1%; 2000: 6.1%, 5.3%.
Also on this chart is a column that shows the proportion of uncompensated care covered by government subsidies between 1984 and 2000. Those proportions were the following: 1984: 23.3%; 1988: 22.4%; 1992: 18.9%; 1996: 17.3%; and 2000:12.1%.
Slide #6:
How does uncompensated care vary by type of hospital?
This chart contains information on uncompensated care (UC) costs and losses as a percent of total hospital costs for nine types of hospitals. The hospital type and corresponding value of UC costs and losses as a percent of total hospital costs, respectively, are as follows: Urban: 6.4%, 5.3%; Rural, 5.3%, 4.7%; Major Teaching, 10.0%, 7.4%; Other teaching: 4.9%, 4.5%; Non-teaching: 4.9%, 4.4%; Voluntary: 4.7%, 4.4%; Proprietary: 4.7%, 4.0%; Urban government: 15.7%, 10.6%; Rural government: 6.4%, 4.9%.
Slide #7:
How concentrated is the provision of uncompensated care?
This slide provides information on the share of hospitals (as a percent of total hospitals) that are providing certain levels of uncompensated care. The levels are categorized by looking at a hospitals' uncompensated care costs as a percent of total hospital costs. The levels of uncompensated care and the share of hospitals providing at that level are as follows: 0-<2%: 13.4%; 2-<5%: 43.0%; 5-<10%: 35.3%; 10-<20%: 6.8%; 20-<30%: 0.7%; 30-<40%: 0.4%; 40-<60%: 0.2%; 60% and above: 0.2%.
Slide #8:
How concentrated is the provision of uncompensated care? (continued)
- Share of all uncompensated care costs furnished by the top 250 providers:
- 1992: 45%
- 2000: 46%
- Of the amount furnished by the top 250 providers, share provided by government hospitals:
- 1992: 61%
- 2000: 53%
Slide#9:
Is there a relationship between uncompensated care and overall financial performance?
This chart looks at uncompensated care costs as a percent of total hospital costs and average margins for five types of hospitals. The hospital type, UC costs as a percent of total costs, and that hospital's average margin are listed as follows: Major teaching: 10%, 1.5%; Private: 4.7%, 5.3%; Urban government: 15.7%, -1.3%; Rural government: 6.4%, 3.4%; All Other: 4.9%, 5.4%.
Slide #10:
Is there a relationship between uncompensated care and overall financial performance? (continued)
This slide provides average total margins for hospitals providing UC at a certain amount of UC costs as a percent of total costs. The percent of total costs that UC costs account for and the corresponding average margin for a hospital providing at that level are as follows: 0-<2%: 4.0%; 2-<5%: 4.6%; 5-<10%: 4.4%; 10-<20%: 4.2%; 20-<30%: 3.8%; 30-<40%: 3.1%; 40-<60%: 3.2%; 60% and above: -0.4%.
Slide #11:
What revenue sources do hospitals use to cover their uncompensated care costs?
- Payments from private insurers (cost shifting)
- Government subsidies
- Operating subsidies
- Dedicated taxes
- Charity care pools
- Medicaid disproportionate share payments
- Medicare disproportionate share and indirect medical education payments
- Revenue from non-patient sources
Slide #12:
States with highest and lowest uncompensated care costs
This slide provides information on which states incur the highest and lowest uncompensated care costs.
The highest costs are incurred in: Louisiana (13.1%); New Mexico (12.8%); Texas (10.3%); Mississippi (8.7%); Nevada (8.1%); Oklahoma (7.9%); Arkansas (7.6%); Florida (7.5%); California (7.4%); and Alabama (7.3%)
The lowest costs are incurred in: Nebraska (2.0%); Minnesota (2.0%); North Dakota (2.4%); Wisconsin (2.6%); Oregon (2.9%); Washington (3.1%); Missouri (3.3%); Rhode Island (3.4%); and Iowa (3.9%).