WASHINGTON—At hospitals that serve vulnerable patients, persistently high levels of uncompensated and charity care pushed average margins down to one-fifth that of other hospitals in 2017, reflecting financial pressure that could deepen with federal funding cuts this year.
New data from America’s Essential Hospitals show that its 300 members, many of the nation’s largest safety-net providers, operated with an average margin of 1.6 percent in 2017—less than half their 2016 average and far below the 7.8 percent average of other U.S. hospitals. The data also show essential hospitals continue to provide disproportionately high levels of uncompensated and charity care.
“Our hospitals do a lot with often limited resources, but this year’s Medicaid DSH cuts will push them to the breaking point if Congress doesn’t step in,” said association President and CEO Bruce Siegel, MD, MPH, referring to a $4 billion cut in disproportionate share hospital (DSH) payments—a third of current funding levels—set for Oct 1. Since 1981, Medicaid DSH payments have helped offset essential hospitals’ uncompensated care costs.
The association’s annual member characteristics report, Essential Data: Our Hospitals, Our Patients, shows that while its members represent about 5 percent of all U.S. hospitals, they provided 17.4 percent of all uncompensated care, or $6.7 billion, and 23 percent of all charity care, or $5.5 billion in 2017.
Consistent with their teaching mission, essential hospitals trained an average of 239 physicians in 2017, compared with 77 at other hospitals. Of that total for essential hospitals, 41 were trained above federal graduate medical education funding caps versus nine at other U.S. hospitals.
Essential Data also found that in 2017:
- three-quarters of essential hospitals’ patients were uninsured or covered by Medicaid or Medicare, and 53 percent were racial or ethnic minorities;
- essential hospitals operated 31 percent of level I trauma centers and 39 percent of burn care beds nationally;
- the association’s members averaged 17,000 inpatient discharges, or 3.1 times the volume of other acute-care hospitals; and
- essential hospitals, in aggregate, saw 15 million people in their emergency departments (EDs) and 80 million in nonemergency outpatient visits.
Among the more striking numbers in the report are those showing the social and economic challenges in the communities essential hospitals serve: 360,000 homeless individuals, 10 million with limited access to healthy food, 23.9 million living below the poverty line, and 17.1 million without health insurance.
“Our hospitals are on the front lines of helping communities and vulnerable people overcome social and economic barriers to good health, and they do much of this work out of their own pocket,” Siegel said. “They do this because they know going outside their walls means healthier communities and lower costs through avoided admissions and ED visits.”
Essential Data: Our Hospitals, Our Patients is available at EssentialData.info.
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About America’s Essential Hospitals
America’s Essential Hospitals is the leading champion for hospitals and health systems dedicated to high-quality care for all, including the most vulnerable. We support our 300 members with advocacy, policy development, research, and education. Communities depend on essential hospitals to provide specialized, lifesaving services; train the health care workforce; advance public health and health equity; and coordinate care. Essential hospitals innovate and adapt to lead the way to more effective and efficient care. Learn more at essentialhospitals.org.