Analyzing uncompensated care by hospital location

Uncompensated care is a measure for hospital care provided that did not receive any reimbursement from a payor. 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.

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. Some research suggests that high-deductible health plans and co-insurance are major causes of increasing uncompensated care costs.

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).

Which areas are most affected by uncompensated care?

Fig. 1 — Analysis based on 4,527 active U.S. hospitals reporting data 2018-2022 from Definitive Healthcare’s HospitalView product.

With a sample selection of hospitals split evenly between rural and urban locales, our data shows that urban locales suffered nearly five times higher uncompensated care costs on average when compared to their rural counterparts. Interestingly, there is a large discrepancy in median uncompensated care costs between the two opposing areas (rural at $1.5 million and urban at $7.8 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 $11 billion. Dallas-Fort Worth-Arlington (code 19100) follows with a total value of $2.7 billion in uncompensated care costs. The cities Los Angeles, California; Miami, Florida; and Chicago, Illinois (along with their surrounding communities) also rank among the highest total uncompensated costs by CBSA with a combined cost of $7.2 billion.

Fig. 2 — Analysis based on 4,527 active U.S. hospitals reporting data 2018-2022 from Definitive Healthcare’s HospitalView product. 

Which CBSAs have the highest average uncompensated care costs?

A ranked list of average uncompensated care costs by CBSA has New York City-Newark-Jersey City (code 35620) leading at $93.3 million. Interestingly, two Floridian territories make this list as well. The Orlando-Kissimmee-Sanford (code 36740) and Miami-Fort Lauderdale-Pompano Beach (code 33100) CBSAs have the third- and fourth-highest average uncompensated care values, respectively.

The data also shows that having a larger number of hospitals in a given CBSA does not directly correlate to increased average cost for uncompensated care, as the San Jose-Sunnyvale-Santa Clara, California area has 106 fewer hospitals than the New York CBSA, but only about $7.5 million less in average uncompensated care.

Fig. 3 — Analysis based on 4,527 active U.S. hospitals reporting data 2018-2022 from Definitive Healthcare’s HospitalView product. CBSAs with fewer than 10 hospitals reporting data excluded.

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

On average, uncompensated care equates to approximately 6.6% of a hospital’s expenses. Based on 2021 Census data, Texas has the highest percentage of uninsured individuals among states. As a percentage of total operating expenses, hospitals in Texas have the second-highest average percentage of uncompensated care at 11.3%. Notably, six of the states with the highest percentage of uncompensated care in relation to operating expenses were 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.

Fig. 4 — Analysis based on 4,527 active U.S. hospitals reporting data 2018-2022 from Definitive Healthcare’s HospitalView product. 

Breaking down uncompensated care as a percentage of total operating expense by CBSA, Miami-Fort Lauderdale-Pompano Beach (code 33100) and Dallas-Fort Worth-Arlington (code 19100) lead with nearly 13%. Texan providers seem to be bearing some extra operational burden from uncompensated care.

This could be due in part 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.

Fig. 5 — Analysis based on 4,527 active U.S. hospitals reporting data 2018-2022 from Definitive Healthcare’s HospitalView product. CBSAs with fewer than 10 hospitals reporting data excluded.

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.