Research Alert: January 22, 2024

A Comparison of 2017-19 Uncompensated Care of Rural and Urban Hospitals by Net Patient Revenue, System Affiliation, and Ownership

Uncompensated care are services provided that are never reimbursed, including charity care and unanticipated bad debt. High uncompensated care burden is a concern because it may contribute to smaller operating margins and rural hospital closures.

The purpose of this study is to better understand patterns of uncompensated care. It extends a 2018 study of geographic variation in uncompensated care between rural and urban hospitals. In the current study, researchers use 2017-2019 Medicare Cost Report data to study the association of uncompensated care with net patient revenue, system affiliation, and ownership among Critical Access Hospitals (CAHs), Rural Prospective Payment System (PPS) hospitals, and Urban PPS hospitals.

Key Findings:

• Rural PPS hospitals had the highest uncompensated care median, and urban PPS hospitals had the lowest.
• Furthermore, rural PPS hospitals with less than $20 million in net patient revenue had the highest median uncompensated care, and urban PPS hospitals with less than $20 million had the lowest.
• Hospitals affiliated with a health system had higher median uncompensated care than hospitals not affiliated with a health system.
• Government-owned hospitals had the highest median uncompensated care for rural PPS and urban PPS, while a small number of for-profit CAHs had the highest median uncompensated care across all groups.

Findings suggest that changes to policies and reimbursement that affect uncompensated care could have a differential effect on hospitals, particularly related to Medicare payment designation, size (as measured by net patient revenue), and ownership.

Additional Resources of Interest:

• Geographic Variation in Uncompensated Care Between Rural and Urban Hospitals
• Provision of Uncompensated Care by Rural Hospitals: A Preliminary Look at Medicare Cost Report Worksheet S-10
• Uncompensated Care Burden May Mean Financial Vulnerability for Rural Hospitals in States That Did Not Expand Medicaid
• More information about the North Carolina Rural Health Research and Policy Analysis Center