Mayo Outpaces Gundersen in Providing Charity Care

By Eric Timmons

Mayo Clinic provided substantially more charity care in La Crosse than Gundersen Health System in 2019, according to a new report.

At its La Crosse hospital, Gundersen provided $8.6 million in charity care last year, representing 0.4% of its total patient revenue. Mayo provided just over $10 million in charity care through its La Crosse hospital, which equaled 1.1% of its total patient revenue. The numbers come from the Wisconsin Hospital Association’s (WHA) Uncompensated Care Report for fiscal year 2019. You can view the full report here.

Charity care is care for which a hospital does not expect payment because it believes the patient cannot afford to pay. Charity care at all reporting hospitals in Wisconsin in 2019 averaged 1% of total patient revenue, with Gundersen’s 0.4%  coming in below that average. Mayo’s level of charity care was above average compared to other Wisconsin hospitals. Elsewhere in the local area, Vernon Memorial Healthcare in Viroqua provided a little over $2 million in charity care in 2019, which at 1.4% of total patient revenue was proportionally higher than at both La Crosse hospitals.

These numbers reflect the amount of charity care the hospitals provided based on how much they charge for services, which a recent study by National Nurses United showed to be more than double the actual cost of care at both Mayo and Gundersen. But the WHA report also shows the value of charity care based on a hospital’s cost to deliver care, which includes labor, supplies and other expenses. If that method is used, the value of Gundersen’s charity care in 2019 drops from $8.6 million to $2.8 million, and at Mayo from about $10 million to just over $4 million, according to the WHA report.

Hospitals also report their bad debt numbers, which are added to charity care to show the total amount of uncompensated care they provide. Bad debt in this context represents care hospitals expected to get paid for but did not. For 2019, Gundersen reported $19.4 million in bad debt, which represented 0.8% of its total patient revenue. Mayo, which has a smaller revenue stream in La Crosse than Gundersen, reported $5.4 million of bad debt for its La Crosse hospital, or 0.6% of patient revenue.

Wisconsin hospitals provided a total of $1.3 billion of uncompensated health care services to their patients in 2019, either as charity care ($630.5 million) or as bad debt ($682.9 million), according to the WHA report. The number represented a 7.3% increase over 2018, which means the amount of people who could not afford health care in Wisconsin appears to have risen significantly last year. Hospitals are required by law to report annual uncompensated care statistics.

Rising Premiums, Deductibles

A growing shift in the burden of health care costs to workers, for those who are covered by employer-sponsored plans, is likely behind some of the increase in uncompensated care in Wisconsin.

For example, annual premiums for employer-sponsored family health coverage reached $21,342 this year, up 4% from 2019, with workers on average paying $5,588 toward the cost of their coverage, according to a survey from the Kaiser Family Foundation. The average single deductible in the survey was $1,644 for workers who have one, similar to 2019’s $1,655, but up sharply from the $917 average of a decade ago. Many more workers now have a deductible compared to 10 years ago, the report also noted. 

Substantial numbers of Wisconsinites also remain uninsured. According to the Wisconsin Department of Health Services, an estimated 7.4% of Wisconsin residents were without health insurance for part or all of 2019. This represents approximately 408,000 Wisconsinites. That number is likely to be higher for 2020 given the economic turmoil created by COVID-19.

Uncompensated care can increase overall costs in the system, and is one of the reasons for the rising prices being charged by providers, which in turn increase insurance premiums and deductibles. Those without health insurance, or who can’t afford out-of-pocket costs, are often sued by hospitals, and medical debt is a leading cause of bankruptcy in the U.S.

The Case for Medicare for All

National Nurses United, the largest union of registered nurses in the U.S., supports the introduction of a single payer system as the obvious solution to the issues of uncompensated care and rising health care costs, which lead many to avoid getting the medical care they need. 

The arguments in favor of implementing single payer, as proposed in the Medicare for All bills, were buttressed this month by a new Congressional Budget Office (CBO) report. The exhaustive study showed that Medicare for All would cover every American while reducing overall health spending. The CBO analyzed different variations of the plan, some more or less generous. Four of the options would save an estimated $42 billion to $743 billion in health care spending in 2030 alone. 

A frequent criticism of Medicare for All is that it would hammer hospitals by making them entirely dependent on reimbursement rates that are similar to those currently paid under Medicare, which are lower than from private insurers. But the CBO study shows that even with more generous reimbursement rates that should satisfy providers, Medicare for All would still save money, while also guaranteeing that no one spends a day without health insurance.

*Gundersen officials did not respond to a request for comment on this story. We will update the article if they provide a statement.

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