(July 2024) – The Kansas Hospital Association wants to help explain complex issues … including hospital finance. It is a fact that reductions or leveling in reimbursements, coupled with increasing numbers of uninsured and underinsured, have created a difficult environment to meet the need for adequate yet affordable health care. This new series is designed to help board members, health care staff and the public understand the nuances of hospital finance.
The first publication in the series, designed to give an overview of different financial elements within the health care industry, focuses on revenue. Hospitals must generate revenue to provide their community with crucial health care services. The complex system of hospital financing includes a variety of revenue sources. A large portion of hospital revenue comes from government programs. The payment rates for these programs are set by law and typically do not cover the full cost of care. This brief provides an overview of government and other hospital revenue sources and explains the challenges of public payer underpayment.
The second publication examines hospital costs – the resources necessary to provide high-quality health care services. Hospital care is a labor-intensive and slim-margin business. Hospitals rely on their highly skilled and dedicated workforce to provide advanced levels of health care services. Employee salaries, wages and benefits make up about half of Kansas hospitals' total costs. Supplies accounted for another 20 percent of costs.
The third publication focuses on EMTALA. The Emergency Medical Treatment and Labor Act requires hospitals with emergency departments to provide three responsibilities regardless of a patient's ability to pay:
- Medical screening examination
- Stabilization of patient
- Transfer or acceptance of patients
The fourth publication is focused on understanding a hospital bill. Hospitals deal with more than 1,300 insurance plans, each with many different plan options. For instance, in the Federally Facilitated Marketplace program, there are approximately 120 unique insurance plans offering more than 75,000 health plan options. This leads to multiple coverage, authorization and billing requirements for hospital bills. This publication explains hospital charges versus payments and how to read a hospital bill.
Additional publications are planned in this Hospital Finance Basics Series. Please contact Shannan Flach, KHA, at (785) 233-7436 with additional hospital finance questions.