Bonds of eight hospitals lapsed in impairment in the first quarter of 2023, the highest number of hospitals disclosing default since 2011, Bloomberg reported March 31.
Only one hospital disclosed default in the first quarter of 2022, according to the report.
The data comes from Municipal Market Analytics. Lisa Washburn, the organization’s managing director, told Bloomberg that an unusual aspect of the impairments is some are coming from large, highly-rated systems.
Ms. Washburn said that is due to a combination of negative investment returns in 2022, federal COVID-19 relief funds drying up and rising costs, particularly labor, according to the report. She added that a backlog of patients who need to move to nursing homes but cannot due to staffing shortages also have affected finances.
“And now add to it that debt costs are higher,” she told Bloomberg.
I admit to being floored by hospital defaults especially considering the prices they charge.
Very few uninsured people make their way into hospitals. The others are insured. Hospitals collect on the vast overwhelming majority of patients. There are reimbursement agreements between private insurers & providers. Do insurers have a stronger negotiation advantage? I can’t see hospitals agreeing to inadequate reimbursement.
The following is 2 years old: Private insurers paid nearly double Medicare rates for all hospital services (199% of Medicare rates, on average), ranging from 141% to 259% of Medicare rates across the reviewed studies. The difference between private and Medicare rates was greater for outpatient than inpatient hospital services, which averaged 264% and 189% of Medicare rates overall, respectively.
For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates across studies.
The question that comes to my mind is what percent of hospital patients are covered by medicare vs private insurers.
A larger part of the issue is how sick or old are the patients. Meaning if you are working and have private insurance you use it much less than a Medicare or Medicaid recipient.
That leads to doctors needing Medicare patients because there are fewer private insurance patients “PER CAPITA”. Not necessarily overall. Especially if you think of childbirth that might not be completely true by size of population.
Just like for anyone else the last dollar in for a doctor is the most profitable.
If they’re defaulting, then obviously the reimbursements aren’t keeping up with their expenses. Think, for example, a hospital that signed a 2-year agreement with large insurers that resulted in a 15% profit margin. Now over the last year or two, their labor and other costs have burned through all 15% and have even put them negative. Now add to that the lower medicare reimbursements and they’re in the hole … eventually default follows. And remember all those who called for “medicare for all”? Had that happened, nearly ALL hospitals would be in default at this point!
Having seen past government actions, would that question be redundant at this point?
In Michigan, the Governors have appointed “emergency managers” that have authority to usurp the power of local elected officials, and make cuts by decree, to make sure the city or school district does not go BK, so the bond holders are paid in full. That was the genesis of the Flint water scandal: city residents were fed polluted water, by the order of the emergency manager, to cut costs, so the bond holders would be paid.
Reduce management pay AND eliminate payments to investment firm “investors” so long as nurses and other staff are underpaid. Better yet, tie employee pay to management pay. When management gets an increase or bonus, employees get a comparable increase or bonus.
Sounds like a way to get started on a government option for health care. If the hospital is bankrupt, the shareholders get wiped out, HHS can pay off the bond holders at something more than they’d get in BK but less than face value, then take over and run the hospital. Doctors, nurses, and other staff keep their jobs, administration is replaced, and the hospital keeps serving the local community.
The hospital business is odd. Only about a fifth of US hospitals are investor owned for-profit businesses. Half of all the hospitals are non-profits, so there are really no “shareholders”. And about a sixth of hospitals are State/Local Government hospitals.
The issue is that if the Federal Government starts taking over defaulted hospitals, almost instantly, all State/Local hospitals will begin to default, so the Feds take them over and start paying the bills. Next will come many, probably most, of the non-profits. Only the very well financed non-profits would opt to remain independent. Meanwhile, the investor owned for-profit hospitals will try to stay alive as long as possible, and will be the last to go.
OK. The feds wouldn’t take over any State/Local hospitals. Just the for-profits and and non-profits. The goal is to get a toe in the Public Option at the federal level, not to switch state/local hospitals to federal ones. Or if a state/locality has a good track record with their hospitals, maybe provide some one-time funding to help the state/local government take over failing hospitals.
The idea is to take a step away from all of this insurance garbage and start providing health care the way the rest of the world does - with basic care provided to all. Federally operated hospitals would be a way to start down that path.
Now that we are exiting supply side economics the federal and state governments can not afford to take over the hospital systems. People will simply die without care. That is the truth of the matter.
It has always been a truth for many people.
That is not a selfishness by doctors or nurses or even the hospitals.
The issue is creating a universal care system where the insurers are not bought out. The way to do that is lower the Medicare enrollment age to 50. That creates a much larger pool of insured people. That is the solution.
The private insurers aim with employers de facto to limit the cost of their pool. That means fewer people in the pool “relative” to the cost of the pool. Meaning Medicare patients are generally sicker and more costly.
Does that deny doctors or hospitals pay? No. Meaning people who are not insured cost the hospitals a lot of money. The idea that Medicare is the culprit misses that point entirely.
There were some 30k deaths in the US in 2019 because people were uninsured or underinsured. That does not mean they do not create billables. That means there is no revenue to deal with the billables.
That is on the rest of us not the victims who do not have insurance.
Later on the Medicare enrollment age would decline to 40 etc.
If we create a universal care instantly we have to buy out the insurers. Good luck with that.
That is why when one man who shall remain nameless claimed that he had a way of getting all American’s covered and another man winced…the man wincing was wrong. Going instantly to universal care is very expensive. Just winding down the private insurers is inexpensive.
Our auditors at OpenTheBooks.com looked at America’s healthcare system and found that so-called “non-profit” hospitals and their CEOs are getting richer while the American people are getting healthcare poorer.
We found that these hospitals add billions of dollars annually to their bottom line, lavishly compensate their CEOs, and spend millions of dollars, which are generated by patient fees, lobbying government to defend the status quo.
USAian “Healthcare” IS money management from its roots to its ragweed flowers
Taking care of USAian’s health in a sane manner MUST begin with a strong pivot to a Public Health System that treats the overwhelming majority of dumbazz health problems as efficiently effectively as possible, all the while imparting education, and while treating the less dumbazz stuff with laser focus however society sees fit.
Now you know the main reason I am in Mexico. Here healthcare is comparatively “poor”, but not fraudulent, and my HIV care is far better and far more caring than anything I experienced on my prvileged platinum healthcare program in the USA:
The “problems” of USA healthcare are due to political deception and skulduggery and cruelty dating all the way back to 1900 when AMA decided (quietly) to destroy public health and high level nursing management of disease treatment.
The Health Insurance industry took over in rackets in the 60’s, and its been raining sorrows upon USAians ever since.
American health care, being private industry and profit focused, means that it is meant to treat diseases. Creating a health public is counter to that as it tends to lessen the number of diseases to be treated later on. Also treating a disease cheaply and quickly is counter to profits as well. Its unfortunate. But that is what happens when the reward system is not pointed in the direction of the person.
That is the fun part of a non-profit. Founders can get VERY rich because “the business wouldn’t exist without him/her/them.” So they can be paid FAR more than a CEO at a comparable for-profit business.