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January 29, 2020

Because uncompensated care costs are not evenly distributed among hospitals, high-level discrepancies in hospital statistics across the country can lead analysts toward hugely beneficial insights that can reduce hospital deficits and increase overall revenues. While some say that high-deductible health plans and co-insurance are current major causes of increasing uncompensated care costs, further research is always necessary.

For this feature, Definitive Healthcare analyzed both total and average uncompensated care costs throughout the U.S. by state, region, and core-based statistical areas (CBSAs).

What is uncompensated care?

Uncompensated care is a measure for hospital care provided that did not receive any reimbursement from a payer. It includes the sum of a hospital’s “bad debt” and charity care. “Bad debt” is accrued when compensation is expected, but not received (i.e. a patient is unable or unwilling to pay their bill) and charity care is sometimes offered to a patient in need with no expectations of reimbursement, or at a reduced cost.

Which areas are most affected by uncompensated care?

rural urban areas most affected by uncompensated care

Fig 1: Results based on 3,855 U.S. hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean) from Definitive Healthcare's Hospitals and IDNs database.

With a sample selection of hospitals split evenly between rural and urban locales—DHC found that while urban locales suffered approximately five times higher uncompensated care costs on average when compared to their rural counterparts, both areas saw these costs represent near matching percentages of their total operating expenses (8.3 percent for rural areas and 7.3 percent for urban). Interestingly, there is a large discrepancy in median uncompensated care costs between the two opposing areas (rural at $2.4 million and urban at $11.6 million).

Which CBSAs have the highest total uncompensated care costs?

The New York City-Newark-Jersey City CBSA (code 35620) has the highest overall uncompensated care/unreimbursed costs at over $2.3 billion. Chicago-Naperville-Elgin (code 16980) follows with a total value of $1.6 billion in uncompensated care costs. The cities of Dallas, Texas; Miami, Florida; and Los Angeles, California (along with their surrounding communities) also rank among the highest total uncompensated costs by CBSA with a combined cost of $4.5 billion.

core-based statistical areas with highest total uncompensated care costs

Fig 2: Results based on 3,855 U.S. hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean); CBSAs with less than 10 hospitals reporting data excluded. Data from Definitive Healthcare's Hospitals and IDNs database.

Which CBSAs have the highest average uncompensated care costs?

A ranked list of average uncompensated care costs by CBSA has Memphis, Tennessee (code 32820) leading at almost $42 million. Remarkably, two Californian territories make this list as well. The San Francisco-Oakland-Berkeley, CA (code 41860) and San Diego-Chula Vista-Carlsbad, CA (code 41740) CBSAs have the third and fifth highest average uncompensated care values, respectively. The data also shows that having a larger number of hospitals in a given CBSA does not necessarily result in increased average cost for uncompensated care.

core-based statistical areas with highest average uncompensated care costs

Fig 3: Results based on 3,855 U.S. Hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean); CBSAs with less than 10 hospitals reporting data excluded. Data from Definitive Healthcare's Hospitals and IDNs database.

What portion of a hospital’s expenses does uncompensated care represent?

On average, uncompensated care equates to approximately 8 percent of a hospital’s expenses. Based on 2018 Census data, Texas has the highest percentage of uninsured individuals among states. As a percent of total operating expense, hospitals in Texas have the second highest average percentage of uncompensated care at 12 percent. Notably, many of the states with the highest percentage of uncompensated care in relation to operating expenses were non-Medicaid expansion states—most Medicaid reimbursements are typically less than 100 percent of the Medicare amount for the same care services, creating greater deficits in unreimbursed care costs among Medicaid providers.

uncompensated care casts by state total operating expense

Fig 4: Results based on 3,855 U.S. Hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean). Data from Definitive Healthcare's Hospitals and IDNs database.

Breaking down uncompensated care as a percentage of total operating expense by CBSA, two Florida cities and their surrounding areas have the highest average percentage—Tampa-St. Petersburg-Clearwater (code 45300) and Miami-Fort Lauderdale-Pompano Beach (code 33100)—each reaching over 13 percent. Florida providers seem to be bearing some extra operational burden from uncompensated care. This could be in part due to negotiated-price plans, like HMOs and PPOs, driving down overall hospital payment rates. Reduced revenue rates for these hospitals means that uncompensated care cuts even deeper into a hospital’s financial health.

average percent of total operating costs uncompensated care

Fig 5: Results based on 3,855 U.S. Hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean); CBSAs with less than 10 hospitals reporting data excluded. Data from Definitive Healthcare's Hospitals and IDNs database.

Four Florida hospitals top $67 million in uncompensated care in 2018

Continuing to observe the more noteworthy standings of Florida hospitals in specific, the Miami-Fort Lauderdale-Pompano Beach CBSA (code 33100) has the fourth highest total uncompensated care cost, fourth highest average uncompensated care value and second highest average uncompensated care costs as a percent of total operating expense. Four hospitals (excluding outliers) have an uncompensated care value over $67 million—Broward Health Medical Center, Plantation General Hospital, Homestead Hospital, and JFK Medical Center.

florida hospitals uncompensated care

Fig 6: Results based on 3,855 U.S. Hospitals that reported data each year 2015 to 2018 with outliers removed (based +/- two standard deviations from mean). Data from Definitive Healthcare's Hospitals and IDNs database.

Learn more

For more information on uncompensated debt and its effects on hospitals across the U.S., read our article, “Balancing Uncompensated Care and Hospital Bad Debt”—then browse through the rest of our content to catch up on other current healthcare industry happenings.


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