For Immediate Release
March 16, 2016

Contact: Nicole Bradshaw
or Eric Lupher
734.542.8001

New CRC Report Documents Michigan Hospital Finances

Since 2010 and the signing of the federal Patient Protection and Affordable Care Act of 2010, Michigan hospitals have seen a transformation of their finances. From Medicare rates to Medicaid expansion, federal and state changes to healthcare policy have impacted hospital revenues. A new report by the Citizens Research Council of Michigan, A Quick Look at Michigan Hospital Finances, provides an overview of the financial picture of Michigan hospitals during this period of major policy implementation.

In total, Michigan hospitals experienced losses in net income from patient services. This deficit increased between 2011 and 2013, but by 2014 had improved. Once other income and expenses were added to income from patient services, Michigan hospitals’ financial conditions looked healthier. Though the conditions for individual hospitals varied, across all hospitals for which there were consistent data for 2011 through 2014, the aggregate surplus ranged from $822 million to $1.56 billion over the period. These surpluses equaled two percent of total revenue for hospitals in 2014.

The new report also compares hospital finances to those in 1998 through 2002 as documented in an earlier CRC report. “A major change in finances since the turn of the millennium is an increase in the contractual allowances and discounts given by hospitals as a percent of total patient revenue,” said Nicole Bradshaw, Research Associate. “Over the 2011 to 2014 period, formal discounts given to third party payers, including private insurance and Medicaid and Medicare, is now equal to 61 to 64 percent of revenue from patients.”

When comparing hospital finances by region, only hospitals in the Upper Peninsula, in aggregate, experienced deficits in 2011, 2013, and 2014. “Finances for hospitals are changing as more individuals are becoming insured. While hospitals have less uncollectable patient revenue, factors such as public health insurance reimbursement levels and increasing difficulty in recruiting physicians and other health care providers, particularly in Michigan’s rural counties, is continuing to change the financial picture of health care delivery,” Bradshaw said.

CRC’s report is available at no cost on the Citizens Research Council’s website, www.crcmich.org.

 

Founded in 1916, the Citizens Research Council of Michigan works to improve government in Michigan. The organization provides factual, unbiased, independent information concerning significant issues of state and local government organization, policy, and finance. By delivery of this information to policymakers and citizens, CRC aims to ensure sound and rational public policy formation in Michigan. For more information, visit www.crcmich.org.

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