Wisconsin hospitals provided $50 million more in uncompensated medical care during fiscal year 2020 than in the prior fiscal year, with the increase driven by more unpaid medical bills.
The Wisconsin Hospital Association’s annual Uncompensated Health Care Report shows hospitals in the state provided about $1.36 billion in uncompensated health care services during the latest fiscal year. That figure includes charity care for patients deemed unable to pay and “bad debt,” for which payment is expected but the hospital is unable to collect. A total of about 1.7 million patient visits account for these categories, the report shows.
Charity care for fiscal year 2020 totaled $620.8 million, and bad debt totaled $742.7 million. By comparison, hospitals in fiscal year 2019 provided about $1.31 billion in uncompensated care, including $630.5 million in charity care and $682.9 million in bad debt. While charity care decreased by about $9.7 million over the fiscal year, bad debt increased by about $60 million.
WHA Senior Vice President of Finance Brian Potter said comparing 2020 to any other year is complicated due to the various impacts of the pandemic on hospitals and health systems. In an interview yesterday, he explained that charity care may have decreased in part because more people were allowed to stay on Medicaid during the pandemic. He said these individuals would “typically get charity care” in years when more churn was seen in the Medicaid population.
He also noted overall patient care activity decreased earlier in the pandemic, which he said “could have a relationship with charity care going down.”
Potter also said the increase in bad debt could be explained by hospitals “writing off more things than they typically would” amid the pandemic, describing an “easing given that everybody was going through really tough times.”
Of the 150 hospitals included in the WHA report, 63 provided more than $5 million in uncompensated health care in FY2020. Thirty-two of those hospitals reported over $5 million in charity care and 42 reported more than $5 million in bad debt.
The report shows hospitals in Milwaukee County accounted for 28.5 percent of overall uncompensated care by dollar amount, with a total of over $388 million. That includes $222.8 million in charity care and $165.6 million in bad debt.
Report authors note that assessing uncompensated care can be tricky. Many hospitals provide free or low-cost services for which the cost to the hospital is “not easily quantifiable,” and therefore can’t be included in the total for uncompensated care.
They also point out that hospitals can only provide so much uncompensated care before it jeopardizes its financial stability. Hospitals can sometimes cover these costs by subsidizing them with revenue from other sources like investments, endowments, parking fees and gift shops, by increasing prices for services, or by shifting costs to other payers, according to the report.
–By Alex Moe