Tip: Managing uncompensated care
Patient Financial Services Weekly Advisor, April 15, 2005
Healthcare financial managers face the increasing challenge of managing not only revenue and expenses, but also uncompensated care. Uncompensated care represents services provided to patients for which the provider receives no payment. There are two classifications of uncompensated care:
Hospitals have traditionally structured their charity programs to the Federal Poverty Guidelines (FPG), which the government updates annually. However, in the past few years, there has been a trend to expand the charity eligibility to greater percentages of the FPG.
Uncompensated care as a percentage of expenditures has remained relatively constant, ranging from a high of 5.8% in 2000 to a low of 5.1% in 2002.
At the same time, the amount of uncompensated care provided has increased from a low of $21.5 billion dollars in 2001 to $24.9 billion dollars in 2003.
On an adjusted patient day basis, the cost to healthcare providers has followed a similar pattern, ranging from a low of $69.51 per adjusted patient day in 2001 to $78.75 per adjusted patient day in 2003.
With hospital operating margins in 2003-2004 ranging from -1.84% to 4.1%, the incorporation of contemporary uncompensated care processing is an important aspect of healthcare financial management.
This tip is excerpted from Charity Care: Tools to Manage the Uninsured Population by Sandra J. Wolfskill, FHFMA. Copyright 2005 by HCPro, Inc. For more information, click here.
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