Charity care is an important part of most hospitals’ operations. While it represents a real financial loss, it promotes better community optics and for some hospitals, cements their status as non-profit facilities exempt from certain local taxes. Charity care is predominantly offered to the uninsured or patients with extremely high deductibles who hospital officials determine are unable to pay. Medical costs for patients who are deemed to have enough assets or income to pay for services but don’t are counted as bad debt and subject to collections.
The top 20 hospitals with the most charity care tend to be larger and serve poorer and more at-risk populations. The average Medicaid payor mix was 26.3 percent for the top 20 hospitals, compared to the all-hospital rate of 10.3 percent. The hospitals also had a higher case mix, averaging 1.78 compared to 1.39 overall. While a higher volume of Medicaid patients suggests a decline in uninsured patients, especially in expansion states, it is also an indicator of the overall wealth and income of the population, and poorer individuals are more likely to be uninsured than those in better financial health. The higher-than-average case mix and longer length of stay at the top 20 hospitals are also significant because they indicate a patient load with more complex medical needs, which in turn are more expensive to treat and pose a greater financial burden for the uninsured.
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