Charity care on the rise

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by Robert Powell

Well before the nation’s economy slipped into recession, Virginia hospitals saw a rapidly rising demand for care from patients who couldn’t pay their medical

In fact, the percentage of hospital care devoted to charity cases doubled from 2002 to 2007, from 4.6 to 9.2 percent.  Virginia hospitals spent $1 billion on

such care in 2007, at a time when one in five hospitals lost money.  However, the total profit margin for all hospitals was up.
These findings come from the 2008 Industry Report for Virginia Hospitals & Nursing Facilities, a yearly study by Virginia Health Information (VHI) that

provides a wide range of measurements of hospital productivity and efficiency. VHI is a Richmond-based nonprofit that tracks health-care data.
Since 2004, Virginia Business has used the VHI report for rankings of the state’s top hospitals in selected service lines based on their volume of patient

The charity-care numbers in the report compare the total value of charity care provided by hospitals with their total net patient revenue. The steady

increase in the charity care is “very much in line with the trends we’re seeing,” says Sheryl Garland, vice president for community outreach at VCU Medical

Center in Richmond. She says that the rising level of charity care is driven by several factors;
• Many families have less access to health care because of jobs lost in the slowing economy;
• Some workers who choose high-deductible health insurance with lower monthly premiums are unable to pay out-of-pocket expenses when they have to

undergo medical procedures; and
• The reimbursement rates of government payment programs such as Medicare and Medicaid have failed to keep pace with the rising costs of medical care.
The Commonwealth Institute, a Richmond-based think tank, says the number of Virginians without health insurance stood at 1.1 million in 2007. Citing census

figures, the institute reports that the percentage of uninsured Virginians rose from 10.3 percent of the population in 2000-2001 to 14.1 percent in

2006-2007. During the same period, the national percentage of uninsured increased from 13.9 to 15.3 percent.
The rising percentage of uninsured Virginians is not necessarily the result of unemployment. The Virginia Health Care Foundation, which provides grants to a

number of health safety-net organizations, says that 73 percent of the uninsured Virginians belong to households in which at least one member works full

Many Virginians with health insurance likely are paying more out-of pocket for their care. A national survey by Mercer, a global human resources consulting

firm, finds that the median deductible required by employers for individual coverage in PPO health plans doubled from $500 last year to $1,000 this year. The

increase mainly affects employees of small companies. The median deductible for individual coverage for companies with 500 or more employees was $300.
In addition to the charitable care figures, the VHI report reveals that one in five Virginia hospitals lost money in 2007. Nonetheless, the total (profit)

margin for all hospitals in the commonwealth rose from 6.6 percent in 2003 to 8.52 percent in 2007. VHI defines total margin as net patient revenue plus

other operating gains and non-operating gains divided by revenue and gains in excess of expenses and losses.
The hospital industry report also includes information on the volume of patient discharges for more than 50 service lines. The hospitals are divided into

five regions. Rankings on the following pages are based on a hospital’s patient discharges for each service line in comparison with the total discharges for

that procedure or condition in the region. Service line information is based on 860,000 patient discharges throughout the state during 2007.
VHI developed the report in partnership with the Williamson Institute at Virginia Commonwealth University. The Industry Report is available at VHI’s website 


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