Bad Debt, Uncompensated Care Take Toll on Florida Hospitals

Rising levels of bad debt and uncompensated care from serving a large population of uninsured and underinsured are hurting Florida’s hospitals on their bottom line.

The Florida Hospital Association reported last week that operating margins for Florida hospitals fell from 2.4 percent in 2005 to 0.8 percent in 2006. In contrast, the national average for operating margins was 4 percent, the FHA said. Operating income at Florida’s hospitals declined 67 percent from 2005.

Uncompensated care costs rose to nearly $2.4 billion in 2006, up from $2.1 billion a year earlier. The FHA said charity care accounted for 54.9 percent, or $1.3 billion, of Florida hospitals’ uncompensated care cost. The remaining $1.1 billion was classified as bad debt.

Additionally, 45 percent of the state’s hospitals lost money on patient care services and 31 percent of its hospitals reported overall losses in 2006.  Nationally, 24 percent of hospitals reported losses for that year.

“The data clearly demonstrates that Florida Hospitals are struggling and at rates higher than most hospitals nationwide,” Wayne NeSmith, the FHA’s president said in a press release.

Industry experts say Florida hospitals serve some of the highest uninsured populations in the country. More than 20 percent of the state’s non-elderly residents do not have health care coverage, leaving the state’s hospitals as one of the few places they can get care regardless of their ability to pay. Only Texas ranks higher in uninsured residents, with 24 percent of its non-elderly population uninsured.

The FHA said its data reflects the financial conditions of 172 acute care hospitals with complete financial records for the fiscal years ending in 2000-2006.