Uncompensated Care Crushing Hospital Finances, Threatening America’s Healthcare
Marcy Marquis, CRCP-P, maxRTE Client Services Manager
The seemingly unstoppable growth of uncompensated care is a weighty financial burden borne by hospitals, threatening the long-term survival of these organizations and risking access to healthcare in the U.S. Digital solutions can lead the way back toward healthy financials.
From bad to worse
Uncompensated care has been on a growth trajectory over the past two decades, totaling more than $660 billion, according to the American Hospital Association. And this does not include figures from the COVID-19 pandemic that consumed much of 2020.1
In 2019 (the most recent year included in AHA’s data) 5,141 of the nation’s hospitals incurred $41.61 billion in uncompensated care costs, down from their peak $46.8 billion in 2013 but __% higher than 2015’s 36.1 billion, the lowest they’d been since 2007.2
Insult on top of injury
Six months ago, consulting firm Kaufman Hall’s survey of hospital executives and financial leaders revealed that 40% of hospitals experienced increases in bad debt, uncompensated care, and self-pay patients since the start of the pandemic. About 38% of hospital leaders also reported a lower percentage of privately insured patients who typically bring in higher revenue than public insured patients.
One-third of respondents saw operating margin decline more than 100% in the second quarter of 2020 compared to the same period the previous year. More than one in five hospital executives also reported expense increases of more than 50 percent, with the greatest percentage increase in expenses being for and nursing staff labor.
What’s more, the decline and lethargic recovery in clinical volume darkens the financial picture. People without insurance as well as those who are wary of COVID are delaying care.
The uninsured who can’t afford the costs of needed care often results in uncompensated care. The Washington, DC-based think tank Urban Institute forecasted that uninsured population would increase by 10 percent through the end of 20203 as working-age adults continue to face job and coverage disruptions because of the pandemic.
Digitization is a light helping healthcare providers struggling to mitigate the financial collision between falling margins and growing expenses. Telehealth adoption is one of those positive impacts the pandemic has had on clinical operations. More than half of surveyed executives said the number of telehealth visits has increased by more than 100% since the start of the pandemic. Looking forward, 30% reported that they do not face any of the common barriers to telehealth adoption, such as patient participation.
The fallout from waning margins has led many revenue cycle managers to turn toward technology and automation tools to recover financially from COVID-19. Eighty-one percent of CFOs and senior leaders surveyed by Black Book4said there was an absolute and immediate need for digital transformations for the long-term survival of their organizations.
As a result, providers are urgently seeking opportunities for digital transformations to capture all revenue through software solutions—in particular those with the power to prevent insurance denials, accelerate the revenue cycle, and recuperate uncompensated care.
If you’re looking for tools that confirm insurance eligibility and locate insurance for patients who are unaware of coverage they may be eligible for, this chart compares available options.
Want more information? To schedule a 30-minute demo or submit a no-charge, no-obligation test file, call 855-954-2120 or visit https://maxrte.com/demo/
1, 2 Healthcare Finance, 1/22/2021
3 RevCycle Intelligence, 7/22/2020
4 Healthcare Finance, 6/9/2020