Breaking down U.S. hospital payor mixes

Understanding a hospital's payor mix gives insight into the organization's financial health and performance.

In the Definitive Healthcare HospitalView product, payor mix data represents the breakdown of revenues, charges, discharges, and patient days that come from different medical insurance claims payors. The proprietary calculation is based on a facility’s charge and revenue measures in the Medicare Cost Report.

This Healthcare Insight reviews payor mix data for over 5,900 U.S. hospitals and compares the results by hospital type, size, and location.

Payor mix classifications

Payor mix classifications include Medicare, Medicaid, and private/self-pay/other.

Private and self-pay net patient revenue is over $713 billion in U.S.

Total net patient revenue for Medicaid was nearly $134 billion in 2020. Medicare total net revenue was $178 billion, and private and self-pay net revenue covered $713 billion.

In 2020, private/self-pay accounted for 68.4% of hospital revenue on average, while Medicare’s percentage of net revenue was 19.8% and Medicaid’s was 13.1%

The percentage of patient days for private/self-pay patients is 53.3%, compared to Medicare’s share of 38.5% of patient days and Medicaid’s 9.7%. This shows that Medicare cases might be more complex or that the patients may have comorbidities that could lead to longer hospital stays.

National payor mix total and average

Fig. 1 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

Percent of private/self-pay patient days increased year-over-year

Medicaid enrollment increased with the expansion of the Affordable Care Act (ACA) and through the COVID-19 pandemic. In addition, the country faces the aging of the American population. With these factors potentially leading to larger Medicare and Medicaid populations, surprisingly, trends for Medicare and Medicaid payor mix show decreases in hospital patient days. Since 2010, the percentage of Medicare patient days decreased from 46.2% to 38.5% in 2020, and Medicaid patient days decreased from 12.4% to 9.7% in the same timeframe.

The percentage of patient days covered by private/self-payors has increased from 42.5% in 2010 to 53.3% in 2020. In addition to rising healthcare costs, this could also reflect the increase in Medicare Advantage enrollment, which are Medicare Part C plans offered by private payors approved by Medicare.

Average percentage of payor days 2010-2020

Fig. 2 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

Hospitals with 25 beds or less have highest Medicare patient days

The percentage of payor days correlates to hospital bed count where the percentage of Medicare days declines and the percentage of private/self-pay days increases relative to a hospital's number of beds. Facility specialties, insurance coverage and hospital service area demographics likely contribute to these differences.

Average percentage of payor days by bed size

Fig. 3 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

Payor days by hospital type often reflect patient demographics

The highest percentage of Medicaid and private/self-pay patient days are at psychiatric hospitals. Critical access and rehabilitation hospitals have over half of their patient days coming from Medicare beneficiaries. This is likely tied to patient demographics.

Average percentage of payor days by hospital type

Fig. 4 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

Hospitals in the west have lowest Medicare days and highest Medicaid days

Comparing the payor patient days by hospital region shows the Midwest has the highest percentage of Medicare days. Hospitals in the west have the least Medicare days and the most Medicaid days. Northeastern hospitals have more payor days from private/self-payors.

Average percentage of payor days by region

Fig. 5 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

Six states have more than 50% Medicare payor days

Breaking down the percentage of patient days by state shows swings from the overall average. For example, the average Medicare patient days is more than 52% in Nebraska, North Dakota, South Dakota, and Mississippi. These four states also have some of the lowest private/self-pay patient days. Pennsylvania has the third highest private/self-pay days and the third lowest Medicaid days.

States with the highest and lowest percentage of payor days

Fig. 6 Data is from the Definitive Healthcare HospitalView product and sourced from the Medicare Cost Report. Data accessed August 2022.

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