Star Wars Wisdom Applies to Charity Care

HealthLeaders Media Staff, November 16, 2009

It struck me as odd to learn this week that in these economic times 67% of patients are unaware they may qualify for free or reduced healthcare expenses, according to a TransUnion survey released last week.

How on earth is that possible? We are in one of the worst economic recessions, and yet people don't know that a hospital can actually help them with more than stitches? I know money is tight for facilities, and number-crunchers have enacted the "charity begins at home" approach to savings, but this percentage should disturb any CFO.

Even a child, let's call him Luke, could easily argue that this stat reinforces why the government is justified in reviewing hospitals' not-for-profit statuses. I'd actually argue something different, Luke, and I'm coming to that. Stay with me for a moment as I switch gears to bill transparency. Since 2006, 30 states have laws requiring some sort of bill transparency, ranging from measures affecting disclosure to general transparency to the reporting and/or publication of healthcare and hospital charges. Interestingly, the TransUnion survey, which polled 654 Americans nationwide in October, notes that two-thirds of adults want to see more transparency in their bills.

Is it a coincidence that 67% of patients want more transparency and 67% didn't know about charity care? On the surface, this might give fuel to young Luke's case, but his logic would be skewed by the numbers and not by the realities that most hospitals are facing. Most facilities strongly believe in their missions to care for the insured, underinsured, uninsured, and the flat-out broke, but they are actually ill-equipped to estimate bills and discern who can pay them before the services are performed. So, hospitals are less vocal about the "free" option to patients, because frankly they aren't always sure who will qualify.

So, Luke, there likely isn't anything sinister afoot at hospitals. Many facilities don't see these losses as large enough to really focus on, so they are a tad behind on adding the technology necessary to correct this, but to quote the cinematic classic Return of the Jedi, hospitals may "pay the price for their lack of vision."

Use the Force: Technology
Sure 30 states enacted well-meaning bill transparency laws, but they are a tad inane. After all, how can you post the price of something that involves so many different components and is so individualized? Moreover, if you can't provide a fairly accurate estimate of your cost of services, a patient simply can't know whether they can afford the service, nor can the hospital know if they should categorize the individual as charity care candidate.

"To ensure hospitals don't watch the revenue leak out they need to collect from the patient at the point of service, but to do that you have to know how much the patient may owe and then determine if they can pay that bill," notes Jim Bohnsack, vice president of product development at TransUnion health group.

It's technology to the rescue, and just in time for what's predicted to be a difficult year for uncompensated debt; consider these stats:

  • Uncompensated care costs rose from $21.5 billion (2001) to $34 billion (2007) and hospitals are reporting an 8% increase through Q3 2008, according to the AHA.
  • Uninsured patient numbers grew from 39.8 million to 47 million from 2001-2007, the AHA notes, and that number is rising.
  • Unemployment hit 10.2% in October, the DOL estimates, and unemployment and COBRA healthcare benefits will expire for millions of unemployed Americans in the coming months.

These are numbers CFOs know all too well. However, when you put them together they make a strong case that uncompensated care will grow at your hospital in 2010, that is unless you change your approach to collection through bill estimation. Riverside Regional Medical Center, a 570-bed facility in Virginia recently added this type of technology to determine charity eligibility at the time of registration.

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