Kentucky Hospitals Community Benefits Programs Total $1.6 Billion in 2010

LOUISVILLE, Ky. – Community benefit programs and services contributed nearly $1.6 billion in community benefits in 2010, according to a recent report by the Kentucky Hospital Association released last month.

The report surveyed the state’s 131 hospitals and their net costs, or revenue they received for services aside from marketing. Marketing costs can vary depending on what healthcare marketing firm a hospital uses and what products and services they try and market. Plus, some hospitals market on a much larger scale depending on their hospital size.

The report found that the financial strength of hospitals was “intimately tied” to Medicare and Medicaid payments because 71 percent of patient days are covered by one of the two programs.

In Kentucky, Medicaid only reimburses hospitals 85 percent of their actual costs and Medicare only 95 percent.

The association found community benefit programs and services increased from $1.48 billion in 2009. The latest figure includes $274 million in financial assistance and charity care, which grew 23 percent from the previous year.

In 2010, Kentucky hospitals spent an estimated $1.2 billion to deliver inpatient services to Medicaid patients, and incurred $435.5 million in bad debt expenses for services that went unpaid, according to the report.

Because Medicaid reimburses hospitals an average of three-fourths of their actual costs, rather than their charges to deliver inpatient services, hospitals were shouldered with $306 million in unpaid costs, the report found.

As a result of these shortfalls, many practitioners can no longer afford to accept Medicaid patients, the report stated.

On average, 55 percent of Kentucky hospitals’ business each year is in Medicare. That means maintaining adequate Medicare reimbursement is essential to assure beneficiaries can have access to quality health care, according to the association.

The government reimbursement that Kentucky hospitals receive for treating Medicare patients is less than the cost of treating them – something most patients don’t know, according to the report.

The association expects Medicare losses to increase significantly under the new federal health care reform law. The law pays for 50 percent of its $1 trillion cost over 10 years with Medicare payment cuts, one-third of which comes from cuts to hospitals.

Kentucky hospital Medicare payments will be reduced by $3.1 billion through 2019, when the Kentucky hospital Medicare shortfall is projected to exceed $852 million.