A separate study of hospitals’ charity care costs and bad debt shows overall quarterly improvement in uncollectible performance. The latest Hospital Accounts Receivable Analysis survey, based on data from the fourth quarter of 2013, finds that U.S. hospitals improved their performance in uncollectible write-offs, which includes gross dollars of bad debt and charity care divided by the total year-to-date gross revenue.
However, the hospitals participating in the survey have fallen behind on meeting the overall performance benchmark of the major financial indicator. U.S. hospitals contributing to the survey report that 5.32 percent of the total 2013 fourth quarter gross revenue was written off as charity or bad debt, a decline from 5.44 percent in the third quarter of 2013. The benchmark goal, however, is to limit charity and bad-debt write-offs to a combined 5 percent or less of total gross revenue.
Hospitals did reach the benchmark goal in the first quarter of 2013 with 4.97 percent of total first quarter revenue reported as a charity or bad debt write off. Since then, the goal has been out of reach. Bad debt continues to be a higher percentage of hospitals’ write-offs than charity care. Of the 5.32 percent in fourth quarter gross revenue written off last year, 3.26 percent was assigned to bad debt and 2.06 percent was assigned to charity.
Looking at the past 12 quarterly financial reporting periods, U.S. hospitals met the uncollectibles benchmark three times, according to the HARA survey. The best results came in during the second quarter of 2011, when U.S. hospitals limited uncollectibles to 4.28 percent of total gross revenue, according to the survey.
In the first quarter of 2012, U.S. hospitals significantly reduced their uncollectible write-offs from 7.28 percent of total gross revenue to 4.55 percent. The most recent decline in the first quarter of 2013 was from 5.38 percent to 4.97 percent.