A jump in the number of Rhode Islanders without health care insurance – from 6.4 percent in 1999 to 9.8 percent in 2002, according to a recent state study – is taking a toll on some hospitals.
At Memorial Hospital of Rhode Island in Pawtucket, for example, free care administered to the uninsured hit $11.6 million in 2003 – an increase from $9 million spent in 2002 – said Memorial Hospital President Francis R. Dietz.
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“The hospital ended up with a deficit in operational costs,” he said. “We usually end up breaking even.”
Free care, also known as uncompensated care, has been on the increase at most hospitals in southeastern New England and nationwide. At Lifespan, uncompensated care at its largest facility, Rhode Island Hospital, rose from 4.5 percent in 2002 to 5.1 percent in 2003. The three hospitals run by Southcoast Health System have seen costs rise from $8 million to $11 million. At Landmark Medical Center in Woonsocket, the number jumped from $4.3 million to $4.7 million; and at Westerly Hospital it rose from $2.6 million to $3.6 million
According to the Virginia-based Lewin Group, which produced the study of the uninsured in Rhode Island for a health task force put together by Secretary of State Matthew A. Brown, the number rose 53 percent in three years. Brown’s task force was expected to release the study last week.
Rhode Island is still in a better position compared to other states. According to the Lewin Group, the average number of uninsured in the nation was 15.2 percent in 2002. That number is a rise from 14.5 percent in 1999.
Ed Quinlan, president of the Hospital Association of Rhode Island, says those with jobs are the fastest-growing sector of the uninsured.
“The increase correlates to the rise in health insurance costs in the state, which have increased by double-digit percentages over the past three years,” he said.
According to what he sees, employees in Rhode Island continue to drop health insurance as larger portions of their salaries are taken to pay for that coverage.
According to statistics put out by the magazine Modern Healthcare in December, those dropping health insurance are making increasingly more money. The data finds that in 2002, 11.8 percent of the uninsured make between $50,000 and $74,999 and 8.2 percent make $75,000 or more.
This population, said Quinlan, becomes part of a group described as “self-payers” in which coverage is paid out-of-pocket; this has not proved an efficient method for hospitals to get paid.
Another factor contributing to rising uncompensated care costs is rising co-pays and deductibles for those employees with health insurance, he says.
Quinlan said that historically people have had problems paying back “the $25 co-pay for a doctor’s visit.”
“And if they are not going to pay $25, they are not going to pay when co-pays are $75,” he said.
At Lifespan, the largest percentage change was at Rhode Island Hospital. At Newport Hospital, uncompensated care rose from 4.2 percent in 2002 to 4.5 percent in 2003. Both hospitals have the highest rate of uncompensated care in the state.
At The Miriam Hospital, the increase was from 2.3 percent in 2002 to 2.8 percent in 2003.
A spokeswoman at Lifespan said listing uncompensated care as a percentage of all services is the most accurate way of presenting the information; this is because hospital charges change from year to year.
John Gillespie, vice president of planning at Lifespan, said the company is concerned with the rise in uncompensated care, but good business practices have helped to cushion the blow.
“In the past couple of years, we’ve made real improvements in management functions and billing procedures,” he said. “We’ve worked with insurers to maximize the reimbursement. We’ve done a lot of that type of work.”
Gillespie said uncompensated care is an issue that he expects will become more prevalent, particularly as health care costs are shifted to individuals through higher premiums, co-pays and deductibles.
He said that when hospital bills start filling the mailbox rather than the desks of insurance providers, he said people may start neglecting health issues.
“A lot of people will put off getting a yearly physical because it costs too much. But, they’ll get their car and oil change every 3,000 miles,” he said. “It’s a huge public policy issue.”
At Massachusetts-based Southcoast Health System – which operates St. Luke’s Hospital in New Bedford, Charlton Memorial Hospital in Fall River and Tobey Hospital in Wareham – the money spent on bad debt and charity care has increased from around $8 million to $11 million in the last year.
In October 2003, Southcoast officials said the cost of free care led to the firing of 52 people and the reduction of hours of 32 others.
Linda Bodenmann, the company’s chief financial officer, said the allowable money spent on free care rose from $8.3 million to $11.3 million. The state uncompensated care pool, of which the company contributes through a tax, was expected to pay the hospital group to cover these costs.
“But we were only given $4.9 million after paying $4.7 million in taxes,” she said. “The difference is a reason why uncompensated care is such a big issue.”
However, she said 2004 should be a better year since the Massachusetts Legislature enacted rules that will increase what hospitals receive from the pool. Bodenmann says $9.3 million will be available at the end of the year while the company expects to pay $3.7 million in taxes to fund the pool.
Dietz said another population of patients is leading to a rise in uncompensated care costs at Memorial.
A number of immigrants, particularly from Latin America, are bringing their parents to the United States for visits. He said they sometimes get sick and go to Memorial for care the hospital ends up writing off.
“I am guessing some will bring parents here for the free care,” he said. “This population and the employed without coverage coming to the hospital are becoming a very serious concern.”
The $11.6 million in uncompensated care costs at Memorial in 2003 is a 25 percent increase since 2002. Prior to that time, costs have risen by single-digit percentages, “which can be dealt with,” Dietz said.
The hospital hasn’t had to cut employees as a result of the costs, but many of the positions lost to attrition have not been filled. Uncompensated care has also been offset by increased revenue from the in-patient surgery department, he said.
Although Memorial has put in place measures to counteract the financial drain of the uninsured, Dietz said something has to change before matters get too difficult to manage.
“We’re negotiating with Blue Cross (Blue Shield of Rhode Island) and United (Healthcare of New England) to help pay for the increase.
“Maybe more people have to be added to roles of Medicare,” he said. “If it keeps going like this, something drastic is going to happen.”
At the 214-bed Landmark Medical Center, the cost of uncompensated care has risen from $4.3 million in 2002 to $4.7 million in 2003.
“I’ve read articles that this trend is increasing throughout the nation. We are constantly trying to figure out why this is,” said Mary Kozik, vice president of public relations at Landmark.
She added that although uncompensated care has increased, the hospital does expect to report a profit in 2003. Un-audited calculations show Landmark should be $50,000 in the black, which is good news after running a $12 million deficit three years ago, she said.
Uncompensated care at Westerly Hospital increased to $3.6 million in 2003 from $2.6 million in 2002.
Westerly Director of Community Relations Nicholas J. Stahl said this is not a welcome trend but the hospital expected a figure of that size and made room for it in their $60 million budget.
“Uncompensated care does not have the same impact on us as it does on hospitals in the Providence metro area,” he said.
