THE BUREAU OF NATIONAL AFFAIRS: MEDICARE REPORT - JULY 19, 2002
Urban Hospitals Relying on Medicaid Operating Budget Deficits, Study Says
A report released July 18 by the National Association for Urban Hospitals said its members operate on tighter margins than rural hospitals, especially facilities that provide at least 15 percent of their patient care for Medicaid beneficiaries.
The report, The Financial Condition of Urban Hospitals, shows that hospitals in urban areas where at least 15 percent of their care is given to Medicaid patients have an average operating margin of minus 7.84 percent, while rural hospitals with 15 percent Medicaid care have an average operating budget of 0.57 percent.
"[Urban hospitals] are spending their endowments and relying on investment income," NAUH Executive Director Ellen Kugler said. "Clearly, that cannot continue if the country would like to maintain a core group of urban health care providers."
NAUH called for a halt in scheduled reductions of Medicare and Medicaid reimbursements for hospitals treating a high percentage of Medicaid patients, restoration of Medicare bad debt payments, and implementation of severity-based diagnosis-related group system. It also advocated more examination of hospital service and Medicare/Medicaid formulas for low-income areas.
The report comes days after a report issued July 15 by the National Association of Public Hospitals and Health Systems stating that, for the first time in five years, the average hospital margin for NAPH member hospitals in negative, even after supplemental Medicaid and Medicare payments are factored in (see related item in this section).
