As hospitals struggle financially from declining reimbursements, the anticipated effects of health reform and other matters largely beyond their control, it may be time to turn their attention to something they can control: bad debt from patients.
Nonprofit health systems have recently begun revealing their 2010 financials through federal tax filings. And, to no one’s surprise, the bad debt numbers are up. A recent survey of hospitals showed that 16 percent believe that 7 percent or more of their revenues last year were lost to bad debt.
In the Cleveland area, recent numbers bear out a rise in bad debt that may leave executives staring blankly — perhaps in stunned silence — at their balance sheets.
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Cleveland Clinic reported that spending on bad debt rose a whopping 49 percent to $86 million, The Plain Dealer reported. The area’s second-largest health system, University Hospitals, said bad debt rose 13 percent to $17 million. Even smaller, suburban hospitals are feeling the pain. Parma General Community General Hospital said its spending on bad debt skyrocketed 77 percent to about $4 million.
It’s not a stretch to wonder if we may see a day in U.S. healthcare when patients are required to pay up front for hospital care — and not just the uninsured. Even well-insured patients could be required to pony up on co-pays, or compensate for high deductibles, before care is delivered.
Hospitals are already upping the intensity when it comes to collecting debts from patients to whom they’ve already given care. Some have begun auctioning off debt online to collection agencies, who will no doubt be aggressive and motivated to get debt-ridden patients to pay up. The web is littered with tips on how hospitals can reduce bad patient debt.
Perhaps no better statement sums up the increasing burden to hospitals of bad debt from patients than this one from a North Dakota hospital executive:
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“If you have a loan for your car and you don’t pay it, your car gets repossessed. If you don’t pay your electric bill, they turn off your electricity. So we’re at the very bottom end because there really aren’t any direct repercussions to not paying your medical bill. ”
With the economy still looking soft, and employers typically passing higher health expenses on to employees, don’t expect the bad debt problem to change any time soon.
As the problem worsens and hospitals’ budgets get stretched more thinly, public attitude on the bad debt issue could increasingly resemble what was displayed at a Tea Party debate in September. Pursuing a line of questioning about medical treatment for an uninsured patient to candidate Ron Paul, the debate moderator asked Paul whether he believed that society should “just let [the patient] die?” Before Paul could answer, a few audience members bellowed their not-so-compassionately conservative response: “Yeah!”
In the end, it’s safe to guess that hospitals will look to exhaust nearly every other means of managing their finances before embarking on a widespread denial of care to those who can’t pay. To do any differently would be to incur some horrible publicity — unless hospitals are trying to appeal to Tea Party voters.
