Bad debt on the rise for hospitals nationally: 4 takeaways

The Affordable Care Act has lowered the uninsured rate in the U.S., but it has not relieved the financial pressure hospitals experience from caring for uninsured patients. It is clear to many hospital leaders bad debt is going nowhere soon, and may even be getting worse thanks to the rise in high deductible health plans, reports Bloomberg.

Below are four things to know about the rise in bad debt at U.S. hospitals.

1. The uninsured rate has fallen, but the percentage of Americans with high deductible health plans is up.

The uninsured rate in the U.S. has fallen from 15.7 percent in 2009 to 9.1 percent in 2015, according to a report from the CDC. Since 2010, however, the percentage of Americans with high deductible or consumer-directed health plans has risen from 25 percent to 36 percent in the first nine months of 2015.

2. Patients are unlikely to have the ability to pay medical bills greater than 5 percent of their household income, according to The Advisory Board.

As median household income in the U.S. is about $53,000, out-of-pocket medical expenses exceeding $2,600 may be difficult or impossible for hospitals to collect, Spencer Perlman, an analyst with Height Securities, told Bloomberg. "When someone has a really high deductible, effectively they're still uninsured," John Henderson, Childress (Texas) Regional Medical Center CEO, told Bloomberg.

3. Some hospitals have reported increased bad debt expenses due to patients' inability to pay.

This month, Community Health Systems in Franklin, Tenn., revised its fourth quarter 2015 financial report for bad debt, increasing the amount to $169 million. CHS officials attributed 40 percent, or almost $68 million of bad debt, to patients being unable to pay deductibles and co-pays.

4. Rural hospitals have been hit particularly hard by bad debt.

Minnesota Hospital Association vice president of finance Joe Schindler said the shift in Minnesota employers offering HDHPs negatively impacted bad debt numbers last year, reports Bloomberg. In 2015, bad debt rose by 20 percent, amounting to $425 million, at the association's 140 member hospitals. "We have 39 hospitals that have negative margins and the majority of them are rural," Mr. Schindler told Bloomberg.

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