Health care has been described as a recession-proof business. However, Montana hospitals are feeling the pain of this great recession.
Uncompensated care has always trended upward, but since 2008, the trend line has become nearly vertical. Last year, Montana's 63 nonprofit community hospitals reported providing $270 million in unpaid care, according to information compiled by MHA, an association of Montana health care providers. That figure includes charges written off as charity and bad debt. In 2007, just two years earlier, charity and bad debt charges totaled about $190 million.
That spike in uncompensated care coincides with a reduction in net income on patient services. In 2006, Montana hospitals had an average patient services margin of 0.80 percent, according to MHA. In 2009, they had a negative margin of 0.46 on patient services. Montana hospitals, as a group, have lost money on patient services in all but three of the past 20 years.
Charity close to home
The state's biggest hospitals are also the biggest providers of uncompensated care. At Billings Clinic, for example, Chief Financial Officer Connie Prewitt has seen the level of services provided to uninsured patients rise steadily. In 2007, 4.1 percent of hospital charges were for uninsured patients. That figure rose to 4.8 percent in 2008, 6.9 percent in 2009, 8.9 percent this year and is projected to be 10 percent in the fiscal year than will end next June.
“The percentage of patients who are uninsured or request financial assistance has increased as a percentage of our business,” said Jim Paquette, chief executive officer at St. Vincent Healthcare. “The fastest growing segment of our patient base are those who are self-pay or uninsured.”
St. Vincent Healthcare's uncompensated care, including both charity care and bad debt charges, is projected to be about $37 million for 2010 — $4 million more than in 2008. St. Vincent lately has seen a drop in bad debt that has been offset by an increase in charity care. For 2010, St. Vincent projects that its charity care will be $24.35 million in charges and bad debt write-offs will be $12.6 million.
St. Vincent has been working on informing patients about the availability of financial assistance, starting in the doctor's office. Determining early on that patients are eligible for assistance relieves patient anxiety, Paquette said.
According to a June report from the Montana Attorney General's Office, the Billings Clinic provided the largest amount of charity care of any Montana hospital in 2008. However, the clinic's bad debt write-off is even larger. For the fiscal year ended June 30, Billings Clinic had $30.1 million in charges written off to charity care and $36.7 million written off to bad debt.
Both charity and bad debt are on the rise, said Prewitt, the chief financial officer at Billings Clinic. The emergency department, psychiatric services and some medical sub-specialty surgeons who get referrals from all over the state, account for much of the uncompensated care, she said.
In Montana, the difference of an account being charity or bad debt often is simply the fact that the patient didn't request financial assistance.
“We know there's a lot of people who may be eligible, but don't apply,” Prewitt said, noting that charity care isn't called “charity.” “We call it our financial assistance program.”
Prewitt said the clinic has been working to make its financial assistance program more useful to patients. Starting Jan. 1, patients who are enrolled in certain public assistance programs, such as food stamps, will have “presumptive eligibility” for clinic financial assistance without filling out a full application. The clinic also is working on “an electronic solution” where patients could fill out the financial assistance forms on computers or online.
Although most patients getting charity care are uninsured, both Billings Clinic and St. Vincent also offer assistance with deductibles and co-payments for insured patients who meet their assistance program guidelines.
Challenge for legislators
When lawmakers convene in Helena Jan. 3, they must deal with the effects of the recession, including an increase in financially needy Montanans and a decrease in state revenues over the past two years. Hospital leaders and other health care providers are concerned that Medicaid, the state-federal health program for indigent, disabled and elderly Montanans, may be reduced. There will be no simple solutions. The state's health care safety net is already stretched in community hospitals all over Montana. State legislators should keep that fact in mind.