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Safety Net Hospitals Seeing More Paying Patients

WebMD News from Kaiser Health News

By Phil Galewitz

Fri, May 23 2014

At Seattle’s largest safety-net hospital, the proportion of uninsured patients fell from 12 percent last year to an unprecedented low of 2 percent this spring—a drop expected to boost Harborview Medical Center’s revenue by $20 million this year.

And the share of uninsured patients was cut roughly in half this year at two other major safety net hospitals—Denver Health in Colorado and the University of Arkansas for Medical Sciences Hospital (UAMS) in Little Rock, Ark.

One of the biggest beneficiaries of the health law’s expansion of coverage to more than 13 million people this year has been the nation’s safety-net hospitals, which treat a disproportionate share of poor and uninsured people and therefore face billions of dollars in unpaid bills.

Such facilities had expected to see a drop in uninsured patients seeking treatment, but the change has been faster and deeper than most anticipated— at least in the 25 states that expanded Medicaid in January, according to interviews with safety-net hospital officials across the country. 

 “This is really phenomenal,” said Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va., which represents inner-city safety net institutions. “It shows the Affordable Care Act is clearly working in these locations.”

Safety net hospitals, most of which are government-owned or nonprofit, have typically struggled financially because their urban locations mean they treat more uninsured patients who show up in emergency rooms and cannot be turned away.  

An Urban Institute study published in the May edition of Health Affairs estimated the costs of uncompensated care to hospitals were as high as $45 billion in 2013. Government programs helped defray 65 percent of those costs, the study estimated.  That left providers billions of dollars in the hole.

That’s one of the reasons the hospital industry was among the first groups to support President Barack Obama’s health plan, agreeing to Medicare and Medicaid funding cuts exceeding $150 billion over a decade in return for getting more paying patients to reduce their uncompensated care.

Many hospital executives were unnerved, therefore, when the Supreme Court ruled in 2012 that states could not be forced to implement the Medicaid expansion and nearly half of them have refused. As a result, hospitals in non-expansion states are undergoing the funding cuts without a corresponding reduction in uncompensated care.

Big Impact On Patients

 

In Seattle, Harborview had projected a $10 million gain in revenue this year because it would be able to recoup payments for services provided to the newly insured. Now, with a 10-percentage-point drop in uninsured patients in one year, the hospital system managed by the University of Washington is projecting a $20 million revenue increase on annual revenue of about $800 million, said Associate Administrator Elise Chayet.

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