Scott Moore: Costs of collection

January 24, 2014 

In your Jan. 18 Notable Numbers, you stated that N.C. hospitals charge an average of 316 percent of their costs. While that might be true, it is only half the picture (at best). Let me offer a couple more notable numbers that shed light on the other side (from my years of experience in health care revenue cycle management and from the Kaiser Foundation).

25 The average percentage of total charges paid by Medicaid

29 The average percentage of total charges paid by Medicare

40 The average percentage of total charges paid by private insurers

20 The average percentage of total charges paid by self-pay patients

35-40 The average percentage of every dollar collected by hospitals that is spent on collecting payment

When you factor in the payer mix, you get hospitals that are either losing money each year or barely getting by. Additionally, due to the complex requirements (both regulatory and industry-defined) of creating an insurance claim and getting it collected, hospitals spend large portions of their revenues on collecting payments. Much of today’s reimbursement environment is the result of unintended consequences of government involvement in the early ’90s (managed care). It will be interesting to see what unintended consequences come as a result of the ACA.

Scott Moore

Raleigh

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