Uncompensated care hammering finances of essential hospitals
These hospitals had an average operating margin of -8.6%, compared with -1.4% for all other hospitals, based on Medicare cost report data.
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Essential hospitals – more than 300 of the nation's largest safety net providers and about 5% of all U.S. acute-care hospitals – provided more than a quarter of all charity care nationally in 2021, but charity and other uncompensated care left these hospitals in the red, according to a new report from America's Essential Hospitals.
Overall, these hospitals had an average operating margin of -8.6%, compared with -1.4% for all other hospitals, based on Medicare cost report data.
Dr. Beth Feldpush, senior vice president of policy and advocacy for America's Essential Hospitals, said the added pressure of the COVID-19 pandemic deepened long-standing financial challenges, including public payer shortfalls and high uncompensated costs.
"Those challenges remain today and underscore the urgency of stopping cuts to key federal safety net support," she said.
WHAT'S THE IMPACT?
Medicaid disproportionate share hospital (DSH) funding is set for an $8 billion cut in mid-November, when the current stopgap government funding measure expires. This amount, two-thirds of all federal DSH dollars, would devastate essential hospitals, Feldpush said.
"They simply cannot sustain a cut of that magnitude," she said. "Access to care and lifesaving services will suffer unless Congress acts."
The association's latest data report, a snapshot of its members, shows that people from underrepresented racial and ethnic groups constituted about 55% of member discharges in 2021, and nearly three-quarters were uninsured or covered by Medicaid or Medicare.
The report also illustrates the socioeconomic status of essential hospitals' communities, where 5.4 million people had limited access to healthful food, 237,000 experienced homelessness, 10 million had no health insurance, and 14.6 million lived below the poverty line in 2021.
Essential hospitals extend their reach with a median of 16 on- and off-campus ambulatory care centers per hospital, including rural health clinics and federally qualified health centers. These networks, which bring care to historically underserved people, would suffer under legislative proposals that disregard the added costs hospitals sustain to operate clinics, the report found.
THE LARGER TREND
In 2021, essential hospitals operated about a third of the nation's level I trauma centers, nearly 45% of burn care beds, and more than a quarter of the nation's pediatric intensive care beds, the report found.
They also trained an average of 246 physicians per teaching hospital versus 69 at other teaching hospitals; and employed more than 3,700 people per hospital, as well as contributing more than $321 billion in economic activity to state economies.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
