Front Street Hospital Case Study
Front Street Hospital Case Study
Domonique Chapman
Professor Ed Schaffer
August 09, 2014
Serving the Uninsured According to Kaiser Family Foundation (2013), more than 47 million Americans were uninsured in 2012. These gaps in health insurance undoubtedly increase healthcare costs, discourage the use of preventative care, and negatively impact the lives and health of the American people. One way to combat this issue is for hospitals and providers to offer charity care to those who qualify and are in need. Non-profit hospitals are organized to serve a charitable purpose to meet the needs of the community and serve indigent patients that would otherwise go without care due to lack of insurance. In return, these organizations receive tax exempt status on all of their earnings. However, some hospitals have fallen short in terms of fulfilling their obligations to the community and the patients in need. The revenue function of healthcare organizations is extremely complex. Part of this issue can be attributed to the different sources of revenue payers: self-pay, Medicare, Medicaid, commercial insurance, and managed care contract payers. Health economist Gerard Anderson notes that “uninsured patients and those who pay with their own funds are charged 2.5 times more for hospital care than those covered by health insurance and more than 3 times the allowable amount paid by Medicare” (Anderson, 2007). Front Street Hospital has most certainly contributed to those staggering figures researched by Anderson. For example, Jane Adams, a young uninsured patient spent two days at Front Street for an appendectomy procedure. An insured patient undergoing the same procedure would have been expected to pay close to $2500 after Medicare and Medicaid reimbursements to the hospital. Instead, Adams was left with a $19,000 bill for the appendectomy. Like all other uninsured patients, Adams didn’t benefit from discounted rates. To add insult to injury, Front
Domonique Chapman
Professor Ed Schaffer
August 09, 2014
Serving the Uninsured According to Kaiser Family Foundation (2013), more than 47 million Americans were uninsured in 2012. These gaps in health insurance undoubtedly increase healthcare costs, discourage the use of preventative care, and negatively impact the lives and health of the American people. One way to combat this issue is for hospitals and providers to offer charity care to those who qualify and are in need. Non-profit hospitals are organized to serve a charitable purpose to meet the needs of the community and serve indigent patients that would otherwise go without care due to lack of insurance. In return, these organizations receive tax exempt status on all of their earnings. However, some hospitals have fallen short in terms of fulfilling their obligations to the community and the patients in need. The revenue function of healthcare organizations is extremely complex. Part of this issue can be attributed to the different sources of revenue payers: self-pay, Medicare, Medicaid, commercial insurance, and managed care contract payers. Health economist Gerard Anderson notes that “uninsured patients and those who pay with their own funds are charged 2.5 times more for hospital care than those covered by health insurance and more than 3 times the allowable amount paid by Medicare” (Anderson, 2007). Front Street Hospital has most certainly contributed to those staggering figures researched by Anderson. For example, Jane Adams, a young uninsured patient spent two days at Front Street for an appendectomy procedure. An insured patient undergoing the same procedure would have been expected to pay close to $2500 after Medicare and Medicaid reimbursements to the hospital. Instead, Adams was left with a $19,000 bill for the appendectomy. Like all other uninsured patients, Adams didn’t benefit from discounted rates. To add insult to injury, Front
References: Anderson , G. (2007). Hospitals charge uninsured and “self-pay” patients more than double what insured patients pay. Retrieved from http://www.jhsph.edu/news/news-releases/2007/anderson-hospital-charges.html Federal Trade Commission (FTC) (n.d.) Gapenski, L. (2010). Cases in healthcare finance. (4 ed., pp. 239-241). Health Administration Press. Gold, J. (2012, April). Nonprofit hospitals faulted for stinginess with charity care. Retrieved from http://www.npr.org/blogs/health/2012/04/27/151537743/nonprofit-hospitals-faulted-for-stinginess-with-charity-care Kaiser Family Foundation