Breaking Down U.S. Hospital Payor Mixes

Definitive Healthcare calculates hospital payor mix using the Medicare Cost Report. This data gives insight into a facility's financial health and performance. Financial data like the payor mix can also identify which hospitals have excess budget. This budget could become medical supplies or new technologies. This includes imaging equipment, PPEs, surgical devices, and more.

Understanding hospital financial data can help segment a market and explain its pain points.

This material reviews payor mix data  for over 5,800 hospitals and compares the results to previous years.

Payor mix classifications 

Medicare Claims charges from beneficiaries who are 65 and older and part of the Medicare program

Medicaid Claims charges from beneficiaries who are part of state Medicaid programs. Also includes Medicaid Managed Care charges

Private/Self-Pay/Other Claims charges from any patients who have private insurance, who do not have insurance or choose to self-pay, Medicare Advantage patients and all other patients

Private and self-pay patient revenue increases to over $1.5 trillion 

Total revenue for both Medicaid and private/self-pay insurance increased from 2017 data. The percentage of the total payor mix from private/self-pay decreased from 67.9% last year while the Medicare percentage increased from 19.5%. This could be representative of the unemployment increases seen throughout 2020. Businesses need to cope with COVID-19 interruptions. 

Additionally, the percentage of Medicare patient days decreased (43.3% in 2017) and increased for private/self-pay (48.4% in 2017).

National payor mix total and average

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

The American population is aging and many state Medicaid programs expanded over the last several years. Trends for Medicare and Medicaid continue to show decreases in hospital patient days. The percentage of patient days covered by private/self-payors has increased from 42.1% in 2010 to 50.8% in 2018.

Average percentage of payor days 2010-2018

Over half of patients' days from Medicare Px are at hospitals with 25 beds or less

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

Average percentage of payor days by bed size

Payor days by hospital type often reflect patient demographics 

Like in previous data sets, the highest percentage of Medicaid and private/self-pay patient days are at psychiatric hospitals. The coverage of inpatient mental health services is a possible cause for some of these differences. Critical access, long-term acute, and rehabilitation hospitals report 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

Western hospitals 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. Year-to-year changes reflect the national results of payor patient days.

This is representative of patient demographics. The Midwest likely reports greater Medicare days because it has a higher population of older Americans. The West likely reports higher Medicare days because of its higher volume of impoverished and underinsured patients.

Average percentage of payor days by region

Individual state payer days mix show range of combinations 

Breaking down the percentage of patient days by state shows swings from the overall average. For example, the average Medicare patient days is over 58% in South Dakota, Nebraska, and Mississippi. These three states also have some of the lowest private/self-pay patient days.

States with the highest and lowest percentage of payor days

Kansas has biggest Medicare days decrease and private days increase 

The changes in percent of payor days year-to-year by state are outlined below. Kansas and Texas had the biggest decreases in percentage of Medicare patient days. Regarding patient days for private/self-pay at hospitals, Kansas and Ohio each had five percentage point increases according to 2017 and 2018 data.

States with the biggest and smallest changes in average percentage of payor days