Declining Charity Care: 1-Year Anomaly or Long-Term Trend?

We recently received new data from the state Department of Health showing the state’s five-year trend in the provision of charity care services. The data was intriguing: The trend between 2007 and 2010 revealed an increase of approximately $82 million (9 percent) in documented charity care provided, with a peak of $1.03 billion in 2010. But last year – for the first time in at least five years – the documented charity care declined statewide by 3.3 percent to $994 million. There’s been a lot of speculation on why this may have occurred, and we have very smart people here at NJHA taking a “deep dive” into the data. While that analysis continues, here are a number of possibilities – none of which are intended to be conclusive:

  • The population of New Jersey is ever changing. Some regions experienced a decline, but other regions saw an increase. For instance, the combined counties of Middlesex and Somerset experienced an increase of 42.6 percent. The lesson here: Each community is different and may have its own unique reasons behind a shift in charity care.
  • The number of uninsured nationwide is decreasing, as evidenced by new data recently released by the U.S. Census Bureau. The new Census data, for example, includes the newly insured up to age 26, who are allowed to stay on their parents’ insurance under the Affordable Care Act.
  • Hospital admissions are down overall in New Jersey hospitals (a 4.5 percent decline in the last year.) That’s a trend that’s consistent with an economic downturn – people very often will delay elective procedures during a weak economy because they are concerned about missing work or other financial factors. Another factor in declining admissions: very light flu seasons in New Jersey the last two years.
  • New Jersey hospitals have focused much attention on their emergency departments, which is the point of entry for most charity care patients. Efforts to partner with federally qualified health centers and provide greater support for “frequent users” may be yielding measurable results.
  • New Jersey hospitals also have increased their focus on Medicaid enrollment for many years. Perhaps we are enrolling more eligible New Jerseyans into Medicaid.
  • Charity care documentation is based on Medicaid rates. A couple of years ago, the state changed the way it pays hospitals for Medicaid services in a way that many believed undervalued behavioral health. That may be a component of the change because so much of the charity care population comes to New Jersey hospitals for behavioral health issues or medical conditions with underlying behavioral health causes.
  • Many hospitals report an increase in bad debt (the amount that they cannot collect from patients). Might the increase in the insured be to high deductible and high co-pay plans that offer the individual an insurance card, but little coverage?
  • And perhaps the biggest variable of all: the impact of healthcare reform and its emphasis on improving efficiency, coordinating care and reducing costs. New Jersey hospitals have been focused intently on providing care in a cost-efficient manner in the appropriate setting and avoiding hospital readmissions. Could we be seeing some impact from that hard work to make our healthcare system better and more sustainable for the future?

Stay tuned as we dive deeper into the data and talk to our members and the state to try and figure out whether this is a one-year blip or a long-term change. We may find out that the reasons behind the data are all of the above, none of the above, a combination of factors – or perhaps something entirely new. That’s the complexity of healthcare.

Written by Betsy Ryan at 18:03

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