Hospital Charges Go Up and So Do Unpaid Bills

Hospitals charged consumers, the government and insurers nearly $875 billion for hospital stays in 2005, up $59 billion from 2004, according to a report from the Agency for Health Research and Quality. The agency found that hospital charges rose at an 89 percent rate from 1997 through 2005, according to its report, “The National Hospital Bill: Growth Trends and 2005 Update on the Most Expensive Conditions by Payer.”

The charges do not include hospital outpatient care, emergency care for patients not admitted to the hospital, or physician fees for the admissions. On average, charges for hospital stays increased 4.5 percent a year in the last three years, said Roxanne Andrews, lead author of the report, which was released Wednesday. And based on past trends, Andrews said charges for hospital stays likely will continue to rise.

It’s also an indicator that hospitals can expect more unpaid patient bills, said Lauren Coste, director, corporate finance for Fitch Ratings. “When you increase the charge master (hospital list price for services), that automatically inflates the bad debt expense because of accounting,” Coste said.

Both Coste and Andrews said hospital revenues for inpatient stays generally don’t match the amount they bill those patients.

“We know they charge more than they get paid and their costs are less than what they are paid on the whole,” Andrews said.

But only uninsured patients are charged hospital list prices, Coste said. And the uninsured as a group only pay a fraction of the charges they are billed. “On average they (hospitals) receive only about 10 percent on the dollar for self-pay uninsured (charges),” she said.

Still, the amount of new business ARM professionals can expect from the trend in rising charges for hospital stays and bad debt depends, in part, on how many new patient bills are identified as delinquent, rather than a patient’s final due balance.

The AHRQ report said the number of admissions between 1997 and 2005, increased just 13 percent from 34.7 million to 39.2 million, compared to the 89 percent rise in charges during that period.

AHRQ conducts and supports a wide range of health services research.