Uncompensated Care

Hospitals' Responses to Fiscal Pressures

Published In: Health Affairs, v. 14, no. 1, Feb. 1995, p. 263-270

Posted on RAND.org on January 01, 1995

by Joyce Mann, Glenn Melnick, Anil Bamezai, Jack Zwanziger

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Discusses how private hospitals in California adjusted their level of uncompensated care in response to increased competition and constrained Medicare and Medi-Cal reimbursement during the period 1980-1989. The authors assert that financial constraints placed on hospitals during that period in an effort to encourage greater efficiency and slow the growth of hospital costs may have undermined the ability of hospitals to support charity care. Although private California hospitals provided a total of $784 million in uncompensated care in 1989, they would have provided 36 percent more such care had financial incentives not changed during the previous decade. The authors contend that many U.S. legislators believed that there was not a crisis in access to care because of the longstanding tradition in the United States that essential health services are available to those who lack health insurance and are unable to pay. This article demonstrates that continued fiscal pressure and/or reductions in disproportionate-share payments to hospitals will jeopardize this safety net.

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