What is uncompensated care?
Uncompensated care is the sum of hospitals’ financial assistance and bad debt. It indicates the amount of hospital care that was not paid for by either the insurer or the patient.
Hospital financial assistance—also known as charity care—is the care that a hospital provides at a lower cost to those in need. Hospitals do not expect reimbursement from this assistance. Hospital bad debt generates from care that needs to be reimbursed but cannot be paid due to certain types of financial hardship.
Uncompensated care does not include underpayments from Medicare and Medicaid and other unfunded care costs.
How does uncompensated care impact healthcare?
Uncompensated care is an important metric in healthcare, as it represents a healthcare organization’s reduced ability to generate revenue from care provided. In turn, reduced revenue can make it more difficult for an organization to deliver medical services. Considered in context with other metrics like net patient revenue, uncompensated care can also provide valuable insight into the ability of a specific patient population to pay.