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Uncompensated Health Care Jumps 7 Percent

June 22, 2009
Uncompensated health care jumps 7 percent Denver Business Journal - by Bob Mook Colorado hospitals are providing more care for people who can’t pay their bills in full, and that likely means more upward pressure on private health insurance rates. The financial gap caused by bad debt, charity care to the indigent and government-sponsored health plans increased 7 percent in the first three months of 2009 from the first quarter of 2008, according to data provided by the Colorado Hospital Association (CHA). The figures reflect the effects of the recession as more unemployed people rely on programs such as Medicaid, which only reimburse what hospitals say are the true costs of medical services at 55 cents on the dollar, said Steven Summer, president of the CHA. “We are clearly hearing about an increased burden,” he said. The CHA said uncompensated care in Colorado hospitals jumped to $382 million in the first quarter of 2009, up from $357 million in the first three months of 2008. Summer said the numbers show the shortfall from the “actual costs” of providing medical services, not the charge that shows up on the hospital bill. The data also lacks numbers from HealthOne_C5E225ECC4494ADCA63C80E000424B45.html">HCA-HealthOne LLC, the largest hospital system in Denver, with 13 hospitals. HealthOne doesn’t provide quarterly figures to the CHA, said Tiffany Radel, a spokeswoman for the association. Leslie Horna, a spokeswoman for HealthOne, provided figures that showed the company reported $97 million in bad debt, charity care and uninsured discounts in the first quarter. HealthOne calculates uncompensated care differently than other local hospitals — basing it on billed charges rather than actual costs. In the first quarter of 2008, HealthOne reported $87.4 million in uncompensated care. Todd Conklin, CFO for Exempla Healthcare, said uncompensated care rose 8 percent in the first quarter for the Denver-area hospital system, which he called “significant.” Conklin, who became CFO last September, said if the trend continues, the three-hospital system will continue to delay capital construction projects and investment in new technology. Exempla — which has trimmed non-labor expenses, frozen employee salaries and new hires — hasn’t ruled out cutting jobs. So far, that hasn’t been necessary because the organization is still meeting its budget, Conklin said. But he said the growing shortfall puts Exempla’s hospitals in a short-term financial bind, especially since its contracts with major insurers are current. Although that won’t result in increased premiums in the short term, it puts pressure on rates down the line, which could cost businesses and individuals with insurance more later on. “Because so much of our reimbursements are contracted with managed care payers, we don’t have a large opportunity to shift costs to other payers,” he said. “What it means is increased cost with less reimbursements.” Uncompensated health care jumps 7 percent - Denver Business Journal: 5/29/09 10:19 AM http://denver.bizjournals.com/denver/stories/2009/06/01/story2.html?t=printable Page 2 of 2 Conklin said there’s little relief in sight in the short term. “You hear various reports saying the economy is supposed to rebound in 2010,” he said. “That means the remainder of 2009 will be weak.” Summer agreed the growth of the state’s Medicaid rolls is hurting the bottom line for local hospitals — although it’s better than people coming into the hospitals with no insurance at all. More Coloradans are covered by Medicaid, the government-sponsored health plan for low-income families, than at any time in its 40-year history, the Colorado Department of Health Care Policy and Financing said earlier this month. The number of Coloradans receiving Medicaid benefits rose to 457,699 in April — an increase of more than 9,000 from the previous month and 72,597 from the same time last year. Although Medicaid reimbursements have improved for Colorado physicians in recent years, hospital reimbursements have remained static. “Hospitals don’t have the luxury of turning away patients,” Summer said. He said although Colorado hospitals are expected to benefit from a new surcharge that would bring in as much as $600 million a year, they won’t benefit from the so-called “provider fee” this year, especially with the number of Medicaid recipients growing. Gov. Bill Ritter’s health policy department worked with the CHA to create the new revenue stream for local hospitals, which the Legislature approved this year. Summer said the provider fee, which still needs approval from the federal government, should begin to “temper” hospital finances by improving Medicaid reimbursements in 2010. Conklin agreed that with the number of Medicaid recipients growing, the provider fee will have a “minimal impact” on hospitals’ bottom line this year. John Bartholomew, CFO for the Colorado Department of Health Care Policy and Financing, said the rise in Medicaid recipients is directly related to economic conditions and efforts by the department to increase the number of Coloradans with health insurance. Bartholomew said the growth rate should slow down as more jobs are created through the federal stimulus plan.