Are Hospitals Ditching Lower-Income Patients for Richer Ones?

A growing trend may reveal the financial motives of many hospitals. Find out what it means for you.

A trend that has hospitals moving to more affluent neighborhoods is spreading across the country, Kaiser Health News reports:

By moving to wealthier areas, hospitals can reduce the percent of uninsured and lower-paying Medicaid patients, while increasing the proportion of privately insured patients — what hospitals refer to as attracting better “payer mix.” That’s also why they locate outpatient centers and medical offices in affluent suburbs.

Hospital relocations are currently planned or underway in Alabama, Florida, Georgia, Illinois, Ohio and Tennessee.

Kaiser Health News highlighted the example of St. Elizabeth’s Hospital in Belleville, Illinois, which hopes to shutter its facility there to build a new, $300-million facility seven miles away in O’Fallon, Illinois.

The nonprofit hospital, which has been in Belleville since 1875, is facing financial troubles partly due to the facility’s age and partly due to its location. St. Elizabeth’s is treating more low-income and uninsured patients from Belleville and the poor city of East St. Louis. O’Fallon, on the other hand, is relatively wealthy and fast-growing.

St. Elizabeth’s president and chief executive Maryann Reese denies such motives in a letter to the Chicago Tribune, however.

“Factual information — based on publicly available demographic and income statistics — proves that our mix of patients will not change,” she writes, adding that a study by the international accounting firm Deloitte “confirmed this.”

Paul Ginsburg, chairman of medicine and public policy at the University of Southern California, tells Kaiser Health News that it’s common for hospitals to relocate to an area based on its patient mix, though.

“Where you choose to place new facilities almost always involves moving to an area where there is a substantial privately insured population,” he says

A 2012 study in the journal Health Affairs reached a similar conclusion.

“Generally, the so-called geographic expansion race involves seeking well-insured patients beyond traditional market boundaries,” the study states.

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