Collecting payments from patients remains a top priority for healthcare providers. But as challenging as these efforts are, they may have become more challenging with the proliferation of high-deductible health plans. These plans have increased the cost burden on patients, which could make it more difficult for hospitals to collect in-full payment.
For this reason, we reviewed trends in bad debt expense reflected in Medicare cost report data, comparing findings of an analysis published in the February 2017 issue of hfm that looked at data from 2015 Medicare cost reports with findings of an analysis that looked at the same type of data listed in 2018 Medicare cost reports.
Not surprisingly, we found bad debt expense reported nationally has increased by $617 million to nearly $56.5 billion between 2015 and 2018. Yet the reason for this increase might well be related more to inflation than to an inability to collect. Further, the data also indicated a decline in bad debt expense as a percentage of revenues over the same period. In other words, proportional to gross charges, less was written off as bad debt expense in 2018 than in 2015.
In the accompanying exhibit, hospitals are categorized into several groups to compare statistics for a variety of operational profiles. The findings account for a variety of facility characteristics, such as whether the hospital is part of a health system, whether it operates a teaching program, and its type of control, number of staffed beds and Medicare policy adjustment program eligibility. Bad debt amounts are divided by gross patient revenue for comparison among groups.