Michigan Hospitals to Post $1.6 billion in Charity Care, Unpaid Bills

High unemployment in Michigan is causing the state’s hospitals to post record levels of charity and unpaid medical care, says a state advocacy organization for hospitals and patients.

Uncompensated care, which is a combination of charity care and unpaid patient bills, is expected to reach $1.6 billion this year for Michigan hospitals, according to the Michigan Health & Hospital Association. The expense has jumped 80 percent since 2001 when uncompensated care totaled $883 million, said David Seaman, MHA’s executive vice president.

“We’ve never seen anything like this before,” Seaman said.

Michigan’s 7.4 unemployment rate, the highest in the nation, is partly to blame, the organization reports. But state hospitals are consistently losing money on patient care, receiving just 98 cents on the dollar for all services they provide.

The association is calling on the state and federal government to pay the full cost of care for Medicaid and Medicare patients to help address the problem.

“The government has to step up and identify that health care is a part of the social fabric of society,” Seaman added. “Pay for what government promises."

All of Michigan’s acute care hospitals are non-profit, Seaman says. Like other non-profit hospitals nationwide they are pledged to provide care to all patients regardless of ability to pay. As a result, Michigan’s hospitals are facing the dilemma of what to do in the face of historical levels of bad debt and charity care.

Seaman says the two obvious options are cost-shifting to insured patients, or stop providing services for certain types of illness. The more likely option, however, is that Michigan hospitals will eliminate services they provide in clinics or limit the hours the hospitals are open, he said.

“They’re all very bad choices,” Seaman says. “Our position so far is to continue to absorb the loss."