May 11, 2011
Strain of Charity Care on Hospitals
Articles in Bloomberg Businessweek and the West Virginia Gazette detail the strain on hospitals of caring for the poor in two areas of the country. This is a story that has been duplicated around the country, with "safety net" hospitals closing in Florida, Georgia, Pennsylvania, and New York in the last several years.
The Businessweek article focuses on Illinois where two charitable hospitals that serve low-income persons in two different parts of the state (East St. Louis and Cook County/Chicago) are seeking the state's permission to close. Many similarly-situated hospitals are coping with increasing costs, budget cuts, and burgeoning numbers of uninsured persons seeking medical care. Even though all tax-exempt hospitals must satisfy the community benefit standard, which arguably entails some charity care, the Businessweek article reports that approximately 800 of the country's 5,000 hospitals shoulder most of the burden, typically located in low-income communities and serving uninsured and Medicaid patients. The amount of patients needing free medical care increased 23% since mid-2009. The East St. Louis hospital serves a community of 30,000, with a 15% unemployment rate and one-third of the residents below the national poverty line. The hospital has been bleeding $5 million a year for over a decade and has accrued over $6 million worth of safety violations. The Associated Press reported subsequently that Illinois Health Facilities and Services Review Board approved the closure of the East St. Louis hospital, but denied the closure of the Cook County facility.
The Gazette article reports that West Virginia hospitals expended more than $721 million on charity care and bad debt writeoffs in 2009, a figure that has doubled from a decade ago (in 1999, $286.8 million in "uncompensated care for residents without insurance or who were underinsured"). The West Virginia Hospital Association reported on the steady increase of uncompensated care in the last decade, including the decreased reimbursements from Medicaid and Medicare in 2009. The Association hopes that the amount of uncompensated care will "stabilize" in 2014, when more individuals are expected to be covered by some sort of insurance due to health care reform.
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