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"*The above uncompensated care figures represent the estimated cost of bad debt and charity care to the hospital." Cost is the key word there and is bolded in

"*The above uncompensated care figures represent the estimated cost of bad debt and charity care to the hospital." Cost is the key word there and is bolded in the link. The billed amount they would have lost would be much higher. Most hospitals collect about only 25% of patient payments owed to them. When they write it down, they use the cost to the hospital not the amount billed.

maxerickson 9y ago
I don't see what is important about that. What is interesting about the amount they attempt to bill?
- creaghpatr 9y ago
  For example, if we're talking about a $5 bandaid (in terms of cost), the hospital will list the price at $20 on the chargemaster. They'll charge an in-network payer $15 and an out of network payer $20. An uninsured patient would probably get charged $10. In any case, if the patient gets charged $10 and doesn't pay, the hospital only writes off $5 as uncompensated care because that's the requirement for government reimbursement. But really they lost $10 on gross patient revenue. It scales up much higher as you can imagine. The point is that the financial cost of uncompensated care is much higher than the dollar amount and why so many hospitals are in financial danger today.
  - maxerickson 9y ago
    Why are "cost" and "financial cost" different things? The stated "cost" of say, taking an x-ray, should be the fully loaded cost, the facility space, the equipment depreciation, any consumables, the time, etc.
    - creaghpatr 9y ago
      Because the margin is so huge in healthcare products and services, especially at hospitals. Hospitals rely on astronomical margins on certain payer classes to subsidize uncompensated care costs. The point is that providers are far more invested in maintaining the huge margins rather than minimizing the cost. Problem is the payer mix has been shifting from insurance companies to patients via high deductible health plans over the past decade so it's starting to wreck their margins, even though the cost doesn't change.

maxerickson 9y ago

I don't see what is important about that. What is interesting about the amount they attempt to bill?

creaghpatr 9y ago
For example, if we're talking about a $5 bandaid (in terms of cost), the hospital will list the price at $20 on the chargemaster. They'll charge an in-network payer $15 and an out of network payer $20. An uninsured patient would probably get charged $10. In any case, if the patient gets charged $10 and doesn't pay, the hospital only writes off $5 as uncompensated care because that's the requirement for government reimbursement. But really they lost $10 on gross patient revenue. It scales up much higher as you can imagine. The point is that the financial cost of uncompensated care is much higher than the dollar amount and why so many hospitals are in financial danger today.
- maxerickson 9y ago
  Why are "cost" and "financial cost" different things? The stated "cost" of say, taking an x-ray, should be the fully loaded cost, the facility space, the equipment depreciation, any consumables, the time, etc.
  - creaghpatr 9y ago
    Because the margin is so huge in healthcare products and services, especially at hospitals. Hospitals rely on astronomical margins on certain payer classes to subsidize uncompensated care costs. The point is that providers are far more invested in maintaining the huge margins rather than minimizing the cost. Problem is the payer mix has been shifting from insurance companies to patients via high deductible health plans over the past decade so it's starting to wreck their margins, even though the cost doesn't change.