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ISSUE: Hospital bad debt, charity care grows
OUR VIEW: Understanding is not fixing the issue
The service has been provided. The bill has been sent. The payment is due. Then overdue. And, eventually, past due.
Anyone in a service business has seen that happen. But few businesses sustain $25 million in bad debt.
Hardin Memorial Hospital is experiencing ballooning bad debt, which is a byproduct, in part, of changing insurance practices.
Patients today pay more out of pocket based on larger deductibles and the hospital ends up carrying some of that as bad debt.
To comply with Affordable Care Act mandates, many employers have had to raise deductibles and co-payments in an effort to manage their escalating health care costs. This leaves the employee on the hook for the difference.
On average, most were used to paying 5 to 10 percent of their medical bills with insurance picking up the balance. Now that figure has grown closer to 15 to 20 percent.
Also, Medicaid and Medicare payment levels don’t cover the full cost of services, but the federal government requires hospitals to accept it as payment in full. That artificially inflates the cost to those paying their own hospital bill with private insurance or personal money.
Even if local residents once unable to pay gain insurance coverage under the Affordable Care Act, bad debt will remain an issue for HMH and the hospital industry.
Bad debt is forcing change in the industry and many hospitals are abandoning the old system of billing patients after services have been provided and waiting for a check.
More and more facilities are pre-qualifying patients based on financial capacity to pay prior to providing services. That pre-qualification process goes much deeper than just proof of insurance.
As the economy still slowly recovers, people are forced to make financial choices.
In some cases, that choice is pay a mortgage or pay an HMH bill for a surgery or emergency room care they received four months ago.
Unfortunately for HMH and other hospitals, the leniency they extend to patients that have difficulty paying has become a expectation.
Equally important is hospitals are receiving less in payment for their services from insurance companies. In negotiations, insurance companies are dictating what percentage of a medical procedure they will authorize.
A heart attack could prove to be financially debilitating even for the most affluent citizen. It is not unfeasible the cost for a severe cardiac arrest could exceed $100,000. If insurance paid 80 percent and the hospital bills you for the balance, you are on the hook for $20,000. In other words, a child’s college tuition fund could disappear with one expensive procedure.
Fortunately, for those unable to satisfy their portion of the payment liability for health care services received, HMH does not allow your ability to pay to dictate the level of care you receive. But from a strict business perspective, this isn’t a sustainable economic model any hospital can afford over the long haul.
One way to avoid growing bad debt would be to evaluate initial charges for services. For example, the average cost of an electrocardiogram, or EKG, is $1,500 in Kentucky. Is this rate truly reflective of the actual cost the health care facility incurs for providing the service? Maybe so. If not, it’s time to re-evaluate the fees.
HMH Board Trustee Garry King offered a partial solution. Currently, HMH does not accept partial payment on outstanding debts. This seems counter-productive to lowering the size of the cumulative debt.
If a patient offers to pay $600 of a $900 bill, take it and make every attempt to make arrangements on the remaining balance. It makes no sense to carry 100 percent of debt on the books if you could accept partial payment and lower that amount. The fear is that would set an expectation of leniency in the community and some that could pay the full tab would take advantage.
King’s suggestion is sound and deserves further consideration. Don’t turn people away that want to pay, even if its only a part of what they owe.
This editorial represents a consensus of The News-Enterprise editorial board.