The High Price of Treating the Uninsured; Hospitals Dealing with Deepening Debt as More Americans without Health Insurance Seek Care

By Karkaria, Urvaksh | The Florida Times Union, May 23, 2005 | Go to article overview

The High Price of Treating the Uninsured; Hospitals Dealing with Deepening Debt as More Americans without Health Insurance Seek Care


Karkaria, Urvaksh, The Florida Times Union


Byline: URVAKSH KARKARIA

With the growing millions of uninsured Americans pouring into emergency rooms seeking health care, hospitals are finding their balance sheets are the ones in real need of CPR.

Having to treat those people, essentially for free, is putting the squeeze on hospital profit margins. And that, industry watchers warn, could impede patient care if financially hamstrung hospitals cut back on critical capital improvements and technology spending.

While Jacksonville-area hospitals haven't hit the bottom of that slippery slope yet, consider this: The cost of bad debt and charity care at Baptist Health System accounted for about $29.3 million in fiscal '04, ended Sept. 30, or about 5.5 percent of the health system's annual operating expenses, senior Vice President and Chief Financial Officer Mike Lukaszewski said.

Baptist expects to shell out even more -- about $32 million to $33 million -- in uncompensated care in fiscal '05. Bad debt refers to the expenses a hospital incurs in treating patients who have the ability to pay but don't do so. Charity care refers to the cost of providing free care to patients who have demonstrated an inability to pay.

As health care costs spiral upward, employers are passing on the increases to employees and in some cases simply yanking the benefit. That leaves millions of workers without insurance or stuck with exorbitant premiums and deductible. So, many are heading to the nearest ER which by law must stabilize all patients regardless of their ability to pay.

There are about 45 million uninsured people in the United States, including more than 2.7 million in Florida, according to Paul Duncan, professor of Health Services Research at the University of Florida. In 1999, there were 2.1 million uninsured Floridians.

"There are just an awful lot of people that can no longer afford to even pay the premiums out of their paycheck," said Bill Ryan, chief financial officer at Shands Jacksonville.

The cost of bad debt and charity for St. Vincent's is expected to top $19 million in fiscal '05, which ends June 30, senior Vice President and Chief Financial Officer Jim Corrigan said. In comparison, bad debt and charity care cost the hospital about $17.6 million in fiscal '04.

About a third of all hospitals in Florida are operating in the red, in large part because of expenses related to treating the uninsured, said Rich Rasmussen, vice president for strategic communications with the Tallahassee-based Florida Hospital Association.

To make matters worse, the federal government is taking the buzzsaw to Medicaid -- potentially unleashing another wave of uninsured and underinsured people.

Congress has endorsed a plan that would cut planned Medicaid spending by $10 billion over the next five years.

"That's certainly a storm cloud that's gonna affect us all. It's going to trickle down to Florida and then . . . to Jacksonville and to every one of us hospitals here," Corrigan said.

The growth rate of the cost of the Medicaid program to federal and state governments has been "unsustainably high," said Duncan, the University of Florida professor.

"The employer who says 'I can't afford to buy health insurance for my employees anymore' ", Duncan said, "is in exactly the same position as the state government that says I can't afford these Medicaid bills."

Florida will spend more than $14 billion in Medicaid expenditures in 2005, said Stephanie Walker, spokeswoman with the Agency for Health Care Administration.

"Over the past six years, the expenditure growth has averaged13 percent" annually, Walker said.

With the federal government taking $10 billion out of the states' coffers for Medicaid programs, states will have little option but to try and cut the Medicaid rolls, Corrigan said.

"So, if there's a million people on Medicaid roles right now, states may only be able to afford 600,000," he said. …

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