Health system bad debt piles up

 U.S. hospitals and health systems in many regions are seeing a sharp rise in uncompensated care, with new data showing big increases in bad debt and charity care deductions during the first quarter of 2025.

“Disruptions in health insurance coverage can drive increases in bad debt and charity care deductions for U.S. hospitals and health systems. According to the latest data from Q1 2025, health systems across the country already experienced significant increases in bad debt and charity deductions in recent years,” noted Strata in its “Healthcare Performance Trends: Q1 2025” report.

Five findings:

1. Health systems’ charity deductions for health systems nationwide grew 5.4% from the first quarter of 2024 to 2025, according to the Strata report. Compared to 2023, charity deductions were up 21.4%.
2. Health systems’ bad debt deductions rose 9.2% in the first quarter compared to last year, and rocketed around 17% since 2023.
3. Hospitals reported a median 7.6% increase in charity deductions from the first quarter of 2024 to this year, while bad debt deductions decreased 0.9%. However, bad debt was still up 15.3% compared to the first quarter of 2023.
4. Year-over-year, bad debt and charity care per calendar day for hospitals rose 9% in March and 13% compared to 2022’s numbers, according to Kaufman Hall’s “National Hospital Flash Report.” However, the bad debt and charity care as a percentage of gross revenue was relatively flat compared to March of last year.
5. The regional breakdown of bad debt and charity care per calendar day for March is:

West
Year over year: 9%
YTD compared to 2022: 59%

Midwest
Year over year: 11
YTD compared to 2022: 48%

South
Year over year: -2%
YTD compared to 2022: -8%

Northeast / Mid-Atlantic
Year over year: -15%
YTD compared to 2022: 7%

Great Plains
Year over year: -13%
YTD compared to 2022: 0%

https://www.beckershospitalreview.com/finance/health-system-bad-debt-piles-up-5-things-to-know/