A recent national survey found nearly one-third of Americans are having trouble paying medical bills.
As the economy weakens, uncompensated care is becoming a greater concern for hospitals. In a cubicle-filled room in Fargo, N.D., about 40 employees help manage and collect medical bills for MeritCare Health System.
MeritCare Revenue Management Executive Doug Okland says the health system wrote off more than $30 million in bad debt last year. He says 80 percent of that bad debt is from patients with health insurance.
But a growing number of patients have insurance with higher co-payments and higher deductible and according to Okland, the extra out-of-pocket expense is not something they've put in their budget. "If you have a loan for your car and you don't pay it, your car gets repossessed. If you don't pay your electric bill they turn off your electricity," said Okland. "So we're at the very bottom end because there really aren't any direct repercussions to not paying your medical bill. "
Okland says overall revenue has risen at about the same rate as bad debt, so bad debt has stayed relatively constant as a percentage of revenue. But he says a bad economy magnifies the effect of bad debt on a hospital's bottom line. "As the whole health care industry struggles financially to achieve a bottom line and maintain their viability, things like uncompensated care become a bigger deal," says Okland. Minnesota hospitals traditionally have a smaller number of unpaid bills than hospitals in other parts of the country.
“We have to think creatively because we're not going to have any money.”Lynn Blewett
But with the economy turning sour, the number of uninsured adults increasing, co-pays and deductibles rising for those who are insured, and more patients delaying elective procedures, hospitals are closely watching their accounts receivable.
According to Minnesota Hospital Association President Lawrence Massa, more medical bills are being written off as bad debt and patients are stretching payment plans over a longer time.
"We're hearing from our members throughout the state that their bad debt expense and accounts receivable days are going up," Massa said.
Massa estimates bad debt for Minnesota hospitals increased about 20 percent this year.
He says that's one reason many hospitals are considering delaying building or remodeling plans.
"It's certainly something we're talking about internally, and I know it will be an issue when the legislature meets," said Massa. "It will come up in terms of what can be done about this as we try to implement health reform legislation here in Minnesota. How do we address these kinds of issues?"
Massa says he doesn't see any short term solutions to the growing medical debt, but the Minnesota Hospital Association will ask the state legislature to expand MinnesotaCare, a state and federally funded program for uninsured residents. University of Minnesota School of Public Health Associate Professor Lynn Blewett, says solutions will need to be community based.
She says short term health care finance solutions are unlikely to come from government.
"We have to think creatively because we're not going to have any money," said Blewett. "So we can't really just expand MinnesotaCare because we're facing a budget deficit at the state level. And the federal government is into trillion dollar deficit budgeting. So we have to think creatively about how to get people care without a lot of resources."
Blewett says one solution some hospitals are implementing is a plan to offer primary care to uninsured people for a small monthly fee. The goal is to keep those people from needing more expensive emergency room care or hospitalization.
That's a short term solution she expects more hospitals to embrace as they monitor the fallout from the economic slowdown.