Kentucky’s nonprofit hospitals provide health care regardless of a patient’s ability to pay, but charity care costs are only a small portion of their total expenses.
Based on a Watchdog.org review of 2012-13 financials from 37 nonprofit members of the Kentucky Hospital Association, charity care costs amounted to an average of 3.3 percent of hospital expenses.
Charity care was typically the smallest part of the 37 nonprofits’ overall uncompensated care costs. Uncompensated care falls into three main categories: charity care for patients without insurance, unreimbursed Medicaid, and bad debt from patients who don’t pay their bills.
Unreimbursed Medicaid — the gap between Medicaid expenses and the reimbursements the government pays care providers — averaged 3.5 percent of the Kentucky nonprofit hospitals’ total expenses in 2013. Bad debt was, on average, 7.3 percent of total expenses.
Combined, the 37 nonprofit hospitals and hospital networks had revenues $295 million greater than the sum of their costs despite 14 of the hospitals and networks operating in the red, with expenses exceeding revenues.
St. Elizabeth Medical Center in Edgewood, Ky., south of Cincinnati, had revenue in excess of expenses — what would have been reported as profits, if the hospital were a for-profit business — of $125 million, by far the most of any nonprofit institution in the state. It accounted for 42.3 percent of all revenue in excess of expenses collected by Kentucky nonprofit hospitals.
St. Elizabeth’s charity care costs equaled 4.7 percent of total costs, while unreimbursed Medicaid was 2.5 percent of total costs and bad debt was 6.9 percent of total costs.
Baptist Health reported $96 million of revenue in excess of expenses, with charity care costs equal to 3.7 percent of total expenses, unreimbursed Medicaid equal to 1.8 percent of total expenses, and bad debt equal to 1.2 percent of total expenses.
To push more of the cost of health care for the poor to federal taxpayers, KHA supports expansion of government programs such as the 2010 health care overhaul and that law’s optional Medicaid expansion.
Democrat Gov. Steve Beshear expanded Medicaid under Obamacare in 2013. Republican Gov. Matt Bevin campaigned against the expansion, but since taking office Bevin has instead decided to pursue minor changes to the expansion.
Obamacare expansion opponents, including U.S. Sen. Rand Paul, a Republican, warned that putting more Kentuckians on Medicaid could be disastrous for rural hospitals.
“My fear is that these hospitals may be bankrupt by overwhelming them with Medicaid patients,” Paul said during a 2013 ABC News interview. “The same with doctors. Some may leave the community. Some may discontinue seeing Medicaid patients if they’re overwhelmed.”
Though Medicaid losses were already more of a burden for Kentucky’s nonprofit hospitals than charity care was, Beshear insisted Obamacare expansion’s new federal welfare spending would create jobs and improve Kentuckians’ health.
“While charity care has declined due to people gaining Medicaid coverage, uncompensated care is far more than just charity care,” KHA wrote in an April 2015 report. The report noted that Medicaid expansion reduced charity care costs, but increased unreimbursed Medicaid costs, as has happened in other states.
KHA did not respond to questions from Watchdog about charity care costs before and after Medicaid expansion took effect in January 2014.
Kentucky’s Medicaid expansion added roughly 400,000 people — primarily working-age adults with no children and no disabilities — to the program in its first two years.
“Patients are hurt most by Obamacare’s expansion of Medicaid as it pushes small and rural hospitals out of the market, which leaves people with fewer choices and less access to providers,” Julia Crigler, state director for Americans for Prosperity Kentucky, told Watchdog.org.
“While the payment scheme of Obamacare can be gamed by large hospital chains, those providing access to rural communities are struggling and that is compounded by the crippling regulations that come with compliance,” Crigler added.
Uncompensated care data for nonprofit KHA member hospitals and networks are listed in the following table.
|Hospital/Network||Revenue Less Expenses||Net charity care as % of expenses||Unreimbursed Medicaid as % of expenses||Bad debt as % of expenses||Year|
|Caldwell Medical Center||-$621,758||3.30%||5.80%||7.09%||2012|
|Casey County Hospital District||$393,631||3.50%||-0.55%||2.58%||2012|
|Clinton County Hospital||-$1,448,338||1.88%||1.24%||14.12%||2012|
|Commonwealth Regional Specialty Hospital||$173,101||3.71%||0.00%||-0.74%||2012|
|Continuing Care Hospital||$252,646||0.22%||0.39%||3.19%||2012|
|Crittenden County Hospital||-$1,318,305||6.52%||5.11%||6.25%||2012|
|Cumberland County Hospital||$202,155||2.65%||3.78%||9.66%||2012|
|Ephraim McDowell Regional Medical Center||$12,314,880||3.61%||2.85%||9.14%||2012|
|Harrison Memorial Hospital||-$649,331||-0.65%||2.56%||6.08%||2012|
|James B. Haggin Memorial Hospital||-$2,455,988||2.77%||3.35%||8.37%||2012|
|Jane Todd Crawford Memorial Hospital||-$5,607,692||5.17%||5.78%||2.34%||2012|
|Jennie Stuart Medical Center||$866,802||3.52%||4.23%||12.27%||2013|
|Jewish Hospital & St. Mary’s Healthcare||-$8,146,281||3.23%||0.00%||7.25%||2012|
|King’s Daughters Medical Center||-$566,281||2.88%||5.06%||3.11%||2012|
|Livingston Hospital & Healthcare Services||-$141,749||2.35%||-0.08%||11.75%||2013|
|Manchester Memorial Hospital||$353,660||6.85%||3.67%||6.64%||2013|
|Marshall County Hospital||$1,409,642||1.94%||1.91%||5.38%||2013|
|New Horizons Medical Center||-$383,220||1.83%||13.48%||12.95%||2013|
|Ohio County Hospital||$476,731||2.19%||2.74%||3.83%||2012|
|Our Lady of Bellefonte Hospital||$4,594,845||1.49%||5.01%||8.62%||2012|
|Pikeville Medical Center||$21,336,769||2.44%||7.12%||20.79%||2012|
|Pineville Community Hospital||-$4,386,653||6.22%||7.94%||3.80%||2012|
|Russel County Hospital||$323,298||5.03%||5.55%||10.90%||2012|
|St. Claire Regional Medical Center||$2,879,119||3.15%||2.51%||10.42%||2012|
|St. Elizabeth Medical Center||$124,859,502||4.65%||2.48%||6.87%||2013|
|St. Joseph Health System||$7,635,491||4.16%||1.51%||9.03%||2012|
|The Medical Center at Bowling Green||$24,694,344||2.30%||2.59%||6.49%||2012|
|The Medical Center at Franklin||$3,224,587||3.61%||0.60%||17.75%||2012|
|TJ Samson Community Hospital||-$3,033,215||1.91%||3.46%||4.49%||2012|
|Trigg County Hospital||$731,641||3.51%||0.81%||10.05%||2012|
|Twin Lakes Regional Medical Center||$6,636,423||0.88%||8.01%||4.76%||2012|
|University of Louisville Hospital||-$9,707,173||7.00%||0.00%||2.56%||2012|
|Wayne County Hospital||-$376,335||4.65%||3.05%||4.24%||2012|
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