Prepared to Care:
Who Supports the 24/7 Role of America’s Full-service
Hospitals?
The standby role of full-service is both unique and critical in the health care system.
Standby Role:• Provide access to care 24 hours a day 7 days a
week (24/7)• Care for all patients regardless of ability to pay• Be ready to respond to disasters
24/7 Role of Full-service Hospitals
Americans rely heavily on the 24/7 access to care provided by hospital EDs…
• One third of hospital care begins in the emergency department.
• The majority of ED patients require immediate care.
• More than half of ED care occurs outside of normal business hours.
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
…and that need is growing.
Source: AHA Annual Survey, data for community hospitals.
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
92.8 94.899.5 103.1 106.0 110.0 111.0 112.6
0
20
40
60
80
100
120
1997 1998 1999 2000 2001 2002 2003 2004
Em
erg
ency
D
epar
tmen
t V
isit
s
Emergency Department Visits, 1997 – 2004, In Millions
Meeting common emergency needs requires a wide array of resources be maintained 24/7.Example: Resource Needs for a Common Condition
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
Safety Net Role
Hospitals provide a medical safety net for the growing number of uninsured…
Number of Uninsured, 2000 – 2004, In Millions
39.8
45.0 45.843.6
41.2
2000 2001 2002 2003 2004
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
…serving proportionally more Medicaid and uninsured patients than physician offices…
Percent of Total Visits by Expected Source of Payment, Emergency Departments vs. Physician Offices, 2003
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
21%
14%16%
36%
5%
23%
56%
10%
Medicaid Uninsured Medicare Private Insurance
Emergency Department Physician Offices
…and taking an increasing role in the care of the behaviorally ill.
1,5071,349
467
662
1995 2004
Units of Hospitals Freestanding Facilities
Behavioral Health-Related Emergency Department Visits, 1994/95 – 2001/02
In Millions
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
Inpatient Psychiatric Facilities, 1995 – 2004
4.4
2.8
1994-95 2000-01
Disaster Readiness
A wide range of disasters hit communities annually…
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
...and hospitals stand ready to respond.
Percent of Hospitals with Response Plans by Type of Incident, 2003
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
97.3%
84.8%
77.2% 76.9%
85.5%
NaturalDisasters
Chemical Biological Nuclear orRadiologic
Explosive
How is this Role Supported?
PrivatePayers
ElectiveCases
LessComplex
SurgicalCases
Well-funded
IndigentCare
24/7 CapacityUnfunded
Revenue from Service to Paying Patients
Medicareand
Medicaid
EmergentCases
MoreComplex
MedicalCases
Under-funded
DisasterReadiness
Hospitals support the standby role through revenues from patient care.
But hospitals face rising levels of uncompensated care…
$18.5
$20.7$21.6 $21.5
$22.3
$24.9
$26.9
$19.0
1997 1998 1999 2000 2001 2002 2003 2004
Total Uncompensated Care Costs (in $ billions),1998 - 2004
Source: AHA Annual Survey
…and a growing shortfall in payment from Medicare and Medicaid.
Hospital Payment Shortfall Relative to CostsFor Medicare and Medicaid Patients in Billions, 1997-2004
1997 1998 1999 2000 2001 2002 2003
Medicare
Medicaid
Bil
lio
ns
of
Do
lla
rs
2004
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
-1.9-2.6 -2.1
-2.3
-5.0
-15
-8.1
-3.4-2.4-1.4
4.32.3
-7.1
-1.6 -1.4
-$30
-$20
-$10
$0
$10
Total Shortfallin 2004: $22 Billion
Medicare and Medicaid account for over half of the care provided by hospitals.
Percent of Gross Revenues by Payer, 2004
Source: The Lewin Group Analysis of American Hospital Association Annual Survey data, 2004 data for community hospitals
Private Pay
43.0%
Other1.7%
Medicare40.7%
Medicaid14.6%
When some payers don’t pay their fair share, others must pick up the difference.
Cost Shifting “Hydraulic"
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
Cost
10 80 907060504030200 100
Below Cost PayersAbove Cost Payers
Pay
men
t to
Co
st R
atio
Percentage of Provider Costs
Cost Shift (A)= Shortfall (B) + Margin Contribution (C)
Margin
Cost Shift
Shortfall
C
A
B
Thus private payers are taking an increasing role in supporting hospital costs.
75%
100%
125%
150%
80 82 84 86 88 90 92 94 96 98 00 02 04
Aggregate Hospital Payment-to-cost Ratiosfor Private Payers, Medicare, and Medicaid1980 - 2004
Source: The Lewin Group analysis of American Hospital Association Annual Survey data, 1980 - 2004 for community hospitals
Private Payer
Medicare
Medicaid
Conclusion
• America’s communities depend heavily on the standby role of full-service hospitals and that need is growing.
• Despite its importance, this role is not explicitly funded.
• Hospitals fund the standby role through revenues from patient care.
• But levels of uncompensated care are rising and the Medicare and Medicaid shortfall is growing.
• Thus, hospitals increasingly depend on the private sector to subsidize this role.
Conclusion (continued)
• The level of “cost-shifting” is increasing.• Government under-funding is a serious issue for
businesses that provide health insurance.• “Cost-shifting” drives up the cost of private health
insurance.
• Higher costs make it harder for employers to maintain coverage.
• Hospitals need the support of the business community in securing adequate funding for government programs.
Top Related