Insurance News

As Health Overhaul Stalls, Hospitals Face Rising Cost Of Uncompensated Care

Posted on: February 11, 2010

For American hospitals, “the cost of doing nothing in Washington translates into tens of billions of dollars each year in medical bills that go unpaid by patients with little or no insurance,” The New York Times reports. “Nationwide, the cost of unpaid care for hospitals, which includes charity care as well as money that could not be collected from patients, was around $36 billion in 2008. It is expected to spiral higher.” Some hospitals, such as Park Nicollet Health Services near Minneapolis, are already cutting back services and staff.

“Even for many patients who do have coverage under Medicaid or Medicare, some experts say, severe state and federal budget constraints mean hospitals will probably get squeezed by significant government payment cuts, whether or not the overhaul legislation moves forward” (Abelson, 2/8).

The Wall Street Journal: “Hospital stocks have dropped as much as 20% from their January peaks,” in part because health overhaul would have reduced uncompensated care, which “amounts to more than 20% of revenue for hospital operators such as Health Management Associates and Community Health Systems, said John Ransom of Raymond James. Moreover, hospitals likely have missed their chance to negotiate a deal with lawmakers providing more certainty on government payments. Federally-run Medicare and state-administered Medicaid account for 40% to 45% of hospital revenue, Mr. Ransom said” (Jannarone, 2/9).

Reuters: “Last year, debate over broad health reform created uncertainty over the shape of the insurance market – making it difficult to make any strategic decisions — while the companies also hoarded cash in the wake of the credit crisis and economic downturn. … Analysts and company executives say the industry still has room for overall consolidation, as companies look to gain market share and leverage in local markets. Insurers that focus on Medicaid plans for low-income Americans – a potential growth area – also could be targets” (Krauskopf, 2/8).

© 2010 MediLexicon International Ltd

Industry groups seek delay in Medicare payer rulesIf Health Reform Fails, Expect More Industry Mergers

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