Bad Debt, Charity Care Take Financial Toll on Hospitals Statewide

The March financial results are out for hospitals statewide – and the numbers show they are still groaning under the weight of skyrocketing bad debts and charity care.

With 86 percent of members responding to the recent survey by the Arizona Hospital and Healthcare Association, hospitals reported  a staggering 85 percent increase in charity from the March numbers a year ago.

Meanwhile, the cost of uncompensated care, which includes both bad debts and charity, was up more than 75 percent from a year ago as well, jumping from $84 million to nearly $148 million.

If the uncompensated care trends continue for a full year, it is anticipated to cost hospitals an additional $301 million. 

“The Association remains concerned that the dramatic increase in hospital uncompensated care will harm hospital financial operations,” warned Jim Haynes, the senior vice president and chief financial officer for the organization.

Haynes said member hospitals pointed to two reasons for the growth in uncompensated care. The toll in part came from a state freeze on enrollment in the childless adult program, which took effect July 2011. A freeze and subsequent elimination of the medical expense deduction program also had an impact.

State lawmakers did not increase any payments to hospitals this year. Healthcare reform is tied up in the federal court system currently, but if it goes into effect as planned in January 2014, the number of uninsured will drop and the cost of uncompensated care is expected to drop as well.

Relief could come at the state level if the legislature were to resume coverage under the state’s Medicaid program for childless adults and the KidsCare population. The KidsCare program has been frozen since January 2010 due to lack of funding.

At Tucson Medical Center, AHCCCS cuts have reduced the non-profit hospital’s reimbursements by $1.1 million per month through reductions in payments and in coverage for childless adults.

Year over year, charity care has increased from $28.6 million in 2010 to $40 million in 2011 and it is projected to top $60 million in 2012.

Meanwhile, TMC’s community benefit as a percent of net revenue increased from 7.2 percent in 2010 to more than 9.6 percent in 2011.

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Tucson Medical Center | 5301 E. Grant Rd. | Tucson, AZ 85712 | (520) 327-5461
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