Calculating Uncompensated Care
Each year, AHA publishes aggregate information on the level of uncompensated care delivered in U.S. hospitals. The data used to generate these numbers come from AHA's Annual Survey of Hospitals. The fact sheet provides the definition of uncompensated care and technical information on how this figure is calculated on a cost basis.
Uncompensated care is first calculated on a hospital-by-hospital basis. Bad debt and charity care are reported as charges in the Annual Survey. These two numbers are added together and then multiplied by the hospital's cost-to-charge ratio, or the ratio of total expenses to gross patient and other operating revenue.
- Uncompensated Care Charges = Bad Debt Charges + Charity Care Charges
- Cost-to-charge Ratio = Total Expenses Exclusive of Bad Debt
Gross Patient Revenue + Other Operating Revenue
- Uncompensated Care Costs = Uncompensated Care Charges x Cost-to-charge Ratio
Combining bad debt and charity care to arrive at the hospital's total uncompensated care cost allows for comparability across hospitals.
Excerpted from American Hospital Association Uncompensated Hospital Care Cost Fact Sheet, AHA, October 2007.
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Publication Date: Thursday, June 05, 2008