Hospital Uncompensated Care Costs Grew to $41.61B in 2019

Hospital uncompensated care costs increased right before the COVID-19 pandemic hit, according to new data from the American Hospital Association (AHA).

AHA data showed that hospitals incurred a new high of $41.61 billing in uncompensated care costs in 2019, the most recent year for which the group had complete data.

Uncompensated care costs in 2019 were up from $41.3 billion in 2018 and $38.4 billion in 2017 and were the second-highest per AHA records. Hospitals reported the most uncompensated care costs in 2013 when they incurred $46.8 billion.

Hospital uncompensated care costs decreased after the all-time high in 2013, but have recently started to tick back up after holding steady at $38.4 in 2016 and 2017.

In just the last 20 years, hospitals of all types have provided more than $660 billion in uncompensated care to patients, AHA reported. And that figure does not fully account for other ways in which provides provide financial assistance to patients of limited means, the group stated.

Each year, AHA aggregates data on uncompensated care, or care provided for which no reimbursement is received by hospitals from patients or payers. The data comes from the group’s Annual Survey of Hospitals, a comprehensive report of hospital financial data.

Uncompensated care is the sum of a hospital’s bad debt and financial assistance it provides, AHA explained.

Bad debt occurs when a hospital does not expect to obtain reimbursement for care provided, such as when patients are unable to pay their financial responsibility and do not qualify for financial assistance or are unwilling to pay their bills.

Hospitals also provide varying levels of financial assistance, AHA added. Financial assistance supports patients who cannot afford to pay and qualify for support from the hospital based on policies it has established based on the facility’s mission, financial condition, and geographic location, among other factors.

Combined, bad debt and financial assistance charges total a hospital’s uncompensated care charges, which is then multiplied by a hospital’s cost-to-charge ratio to determine total uncompensated care costs.

AHA noted that it expressed uncompensated care in costs versus charges because of significant variations in hospital payer mixes. Publishing the information as costs rather than charges enables better comparison across hospitals, the group said.

Nearly half of hospitals (48 percent) have seen bad debt and uncompensated care increase recently as a result of the ongoing COVID-19 pandemic, an analysis from consulting firm Kaufman Hall revealed.

More than 40 percent of hospitals also reported increases in percentage of uninsured or self-pay patients (44 percent) and the percentage of Medicaid patients (41 percent), which both contribute to unfunded or underfunded care at hospitals.

“The challenges brought on by the COVID-19 pandemic have affected nearly every aspect of hospital financial and clinical operations,” Lance Robinson, a managing director at Kaufman Hall, said at the time. “Organizations have responded to the challenge by adjusting their operations and strengthening important community relationships.”

Hospital uncompensated care costs – and bad debt as a result – are likely to increase in 2020 as hospitals come to terms with the impact COVID-19 has had on their financial health.

Already, hospitals have lost an estimated $323 billion in 2020 as a result of the COVID-19 pandemic, according to earlier projections from AHA.

About half of US hospitals also started the year in the red, AHA and Kaufman Hall stated in a recent report. The organizations predicted that hospital margins would sink to -7 percent in the second half of 2020 without comprehensive financial support from the government, but could decrease to a low of -11 percent if COVID-19 continued to periodically surge as it has.