Uncompensated care looms as formidable financial threat

With the prospects for health reform on life support, uncompensated care could potentially cripple some hospitals' financial viability.

Hospitals were forced to absorb $36 billion in unpaid care in 2008, including charity care and bills that go unpaid by the uninsured or underinsured. Without reform, that amount could swell to exponentially, given that the number of uninsured Americans is estimated to jump up to 58 million by 2014.  

Worst-case scenario: The cost of uncompensated care could soar up to 128 percent (and up to 72 percent in a "best case" scenario"), according to research by the Urban Institute.

"Our business model will continue to falter," says Dr. David Abelson, chief executive of not-for-profit Park Nicollet Health System near Minneapolis, recently told The New York Times. Park Nicollet's uncompensated care increased to $43 million in 2009, up from $29 million in 2007. Similarly, uncompensated care at Beaumont Hospitals in Royal Oak, Mich., has grown by 20 percent annually since 2005.

Medicare and Medicaid funding also is problematic, with Park Nicollet receiving below-cost reimbursement, says Abelson. The system anticipates a loss of $120 million this year on federal and state programs. As a result of the growth in uncompensated care, Park Nicollet has reduced services and laid off several hundred employees, he says.

 For more information
   - read The New York Times article
   - read research by the Urban Institute