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January 16, 2012

A Snapshot: Is Free Care in Minnesota What It Appears?

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With any luck, we’ve finally left the worst of the financial crash behind, and with it the financial challenge posed by large numbers of medically indigent patients.  A recent report from Minnesota’s hospital trade group underscores how bad things were for patients. It also suggests that the hospitals may not quite be as charitable as they claim.

According to the report, the level of free or discounted care provided by the state’s hospitals shot up 27 percent in 2010, driven largely by falling state coverage and rising unemployment.  The Minnesota Hospital Association said that state hospitals provided $226 million in charity care last year, along with $498.5 million expenses generated by Medicaid patients receiving discounted care that wasn’t reimbursed.

OK, let’s break this down. We’ve got, very broadly, $750 million in direct charity care expenses among 135 hospitals.  While I don’t know exactly what they grossed in 2010, we can be pretty sure it exceeds that figure by at least three or four orders of magnitude.

Sure, several million in charity care per hospital is enough to erode the slim margin most hospitals cope with year to year.  On the other hand, we know it’s not a simple matter of money in, expenses paid for charity care.  The accounting gets more complicated than seven-way chess, and let’s admit it, some of the numbers are a bit dicey at best.

Now, I’m not suggesting any individual hospital is gaming the system worse than others. But I am suggesting that if this is the best they can come up with, they’d better get cracking. Neither the IRS or Congress has much patience for charity care numbers that don’t add up, and municipalities (at least in Illinois) are getting into the “yank the tax exemption” act too.

Bottom line, you better keep your nose clean and those charity care numbers better be above board. If you’re not already, it’s time to avoid accounting tricks and play it straight.

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