Uncompensated care hits hospital bottom lines

Despite the addition of millions of newly insured Americans under the Affordable Care Act (ACA), hospitals continue to struggle with the issue of bad debt because of non-paying patients.

The primary reason why patients aren't paying their bills? More than a third of all Americans are insured by plans with high deductibles and out-of-pocket costs, according to Bloomberg News. That is up from just 25 percent in 2010, the year the ACA was signed into law.

"It feels like a sucker punch," John Henderson, chief executive officer of the non-profit Childress Regional Medical Center in Texas, told Bloomberg. "When someone has a really high deductible, effectively they're still uninsured, and most people in Childress don't have $5,000 lying around to pay their bills."

Rural hospitals have been hit especially hard because they don't have the financial cushion of urban and teaching hospitals to absorb the losses from bad debt, according to Bloomberg.

But for-profit hospital chains have also been hit hard, the article noted. For example, Community Health Systems, which operates 195 hospitals in 29 states, increased its bad debt provision by $169 million for the fourth quarter of 2015. The company told Bloomberg that of that sum, $68 million is attributable to patients who have insurance but can't afford their deductibles and out-of-pocket costs.

Some hospitals have tried to change collection tactics in order to better ensure payments, such as using point-of-service collections prior to rendering care. Nonetheless, uncompensated care totaled $42.8 billion in 2014, down from $46.4 billion in 2013. The total expense for that category also dropped from 5.9 percent to 5.3 percent.

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