How well do you know about your local hospitals? While driving on the interstate in your town or city, have you seen any billboard advertisements of your hospital? Or maybe you’ve seen one plastered alongside city buses or occupying space along the walls of places like the mall. Most of these advertisements stress the importance of the hospital being community-oriented, where the pictures show friendly face, compassionate doctors and nurses helping the people they care about most. If you’ve seen one of these on your side of town, your hospital is most likely a nonprofit organization.
In the United States, hospitals fall under one of three categorical types: 80% are non-profit, 2% are government owned, and 18% are for-profit. Focusing on the non-profit hospitals, they are defined as such because they do not pay either state or local property taxes or federal income taxes. They are deemed as charities because they are required to fulfill certain community benefits that agree with state and federal guidelines.
The issue with many nonprofit hospitals today, according to the Congressional Budget Office (CBO), is that over the years, “on average, nonprofit hospitals provided higher levels of uncompensated care than did otherwise similar for-profit hospitals.” These non-profit hospitals serve communities representing people from various economic backgrounds. However, the groups that are hit the hardest are the low-income and the uninsured. For decades, uninsured patients have had to pay hospitals far more than Medicaid, Medicare, and private insurers would pay for the same services. As a result, the uninsured were forced to pay full list prices (the flat rate price of services as listed in the charge master) at hospitals. And when patients are unable to afford care, they become victims to abusive medical debt collection practices from the hospitals. Some of the tactics include not offering financial assistance to patients, suing patients and their spouses, and in some states, denying future care to patients with debt1.
The Obama administration has now mandated new regulations that limit the tactics non-profit hospitals use to collect fees from patients. As discussed in a recent New York Times article, the regulations will ensure that patients that meet the requirements for financial assistance will not be charged more than theamounts generally billed to others who have insurance2. According to a previous study done on Medicare spending, for every $1 Medicare is billed by American hospitals, Medicare only pays $.27, which assures them a 73% discount3.
The new regulations mean no one would be charged more than the Medicare rate. As a result, the hospitals will also have to be more engaged with the communities they serve and address the unique health needs of their population once every three years to qualify for tax exemptions. The rules also force hospitals to be more cognizant of the patient’s need for financial assistance and offer it accordingly. The plan for the future is to bring for-profit hospitals and all other medical providers on board with the new approach to further help patients.
For further reading:
1. http://www.credit.com/debt/medical-bill-nightmares/
2. http://www.nytimes.com/2015/01/12/us/politics/new-rules-to-limit-tactics-on-hospitals-fee-collections.html
3. http://www.nerdwallet.com/blog/health/2013/06/03/nerdwallet-health-study-finds-medicare-73-discount-hospital-bills/