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Prepared to Care: Who Supports the 24/7 Role of Americas Full-service Hospitals?

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Presentation on theme: "Prepared to Care: Who Supports the 24/7 Role of Americas Full-service Hospitals?"— Presentation transcript:

1 Prepared to Care: Who Supports the 24/7 Role of Americas Full-service Hospitals?

2 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

3 24/7 Role of Full-service Hospitals

4 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 Americas Full-service Hospitals, 2006

5 …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 Americas Full-service Hospitals, 2006 Emergency Department Visits Emergency Department Visits, 1997 – 2004, In Millions

6 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 Americas Full-service Hospitals, 2006

7 Safety Net Role

8 Hospitals provide a medical safety net for the growing number of uninsured… Number of Uninsured, 2000 – 2004, In Millions Source: The Chartis Group, Prepared to Care: The 24/7 Role of Americas Full-service Hospitals, 2006

9 …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 Americas Full-service Hospitals, 2006

10 …and taking an increasing role in the care of the behaviorally ill. Behavioral Health-Related Emergency Department Visits, 1994/95 – 2001/02 In Millions Source: The Chartis Group, Prepared to Care: The 24/7 Role of Americas Full-service Hospitals, 2006 Inpatient Psychiatric Facilities, 1995 – 2004

11 Disaster Readiness

12 A wide range of disasters hit communities annually… Source: The Chartis Group, Prepared to Care: The 24/7 Role of Americas Full-service Hospitals, 2006

13 ...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 Americas Full-service Hospitals, 2006

14 How is this Role Supported?

15 Private Payers Elective Cases Less Complex Surgical Cases Well-funded Indigent Care 24/7 Capacity Unfunded Revenue from Service to Paying Patients Medicare and Medicaid Emergent Cases More Complex Medical Cases Under- funded Disaster Readiness Hospitals support the standby role through revenues from patient care.

16 But hospitals face rising levels of uncompensated care… Total Uncompensated Care Costs (in $ billions), Source: AHA Annual Survey

17 …and a growing shortfall in payment from Medicare and Medicaid. Hospital Payment Shortfall Relative to Costs For Medicare and Medicaid Patients in Billions, Medicare Medicaid Billions of Dollars 2004 Source: The Chartis Group, Prepared to Care: The 24/7 Role of Americas Full-service Hospitals, 2006 Total Shortfall in 2004: $22 Billion

18 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% Other 1.7% Medicare 40.7% Medicaid 14.6%

19 When some payers dont 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 Below Cost PayersAbove Cost Payers Payment to Cost Ratio Percentage of Provider Costs Cost Shift (A)= Shortfall (B) + Margin Contribution (C) Margin Cost Shift Shortfall C A B

20 Thus private payers are taking an increasing role in supporting hospital costs. Aggregate Hospital Payment-to-cost Ratios for Private Payers, Medicare, and Medicaid Source: The Lewin Group analysis of American Hospital Association Annual Survey data, for community hospitals Private Payer Medicare Medicaid

21 Conclusion Americas 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.

22 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.


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