Spending at Minnesota hospitals on community benefit programs increased by about 8 percent in 2015 to roughly $2.63 billion, according to a report released Tuesday.
The annual survey from the Minnesota Hospital Association, a trade group, charted a significant increase in hospital costs related to treating patients in the state-federal Medicaid program, which provides coverage for many low-income state residents.
Community benefit programs range from uncovered Medicaid costs and charity care to research and workforce development.
Hospitals have long complained the state-federal Medicaid insurance program doesn’t cover their costs when caring for patients. The new report puts the shortfall in 2015 at $896.6 million, up from $758.6 million the previous year.
Medicaid coverage has expanded with the federal Affordable Care Act, which also has helped drive a significant reduction in the state’s uninsured rate. To the extent that previously uninsured patients are now being covered through Medicaid, hospitals are at least recovering some of their costs, said Lawrence Massa, the president of the Minnesota Hospital Association, in an interview.
“We believe they are better off,” Massa said, “because they are getting some contribution to overhead.”
Charity care costs at hospitals in 2015 were up slightly, the report found, but hospitals saw less “bad debt” expense that occurs when patients don’t pay hospital bills. The findings differ from a Minnesota Department of Health study last year that charted a decline in both charity care and bad debt during 2015.
Hospital officials said the health department study looked only at charity care at hospitals, whereas the trade group also looked at outpatient and clinical care at hospitals.
Most hospitals in Minnesota are nonprofit organizations that benefit from tax exemptions, so the IRS requires they publicly report community benefit program expenses.
In 2015, community expenses at hospitals were 11.6 percent of total operating expenses, the report said.