If you follow hospitals, you may have noticed a lot of executives are saying they are "affected by changes in payer mix." That is industry jargon that means a hospital is treating fewer patients with commercial insurance and more patients with government insurance — like more baby boomers on Medicare, Bob Herman reports.
From two recent hospital company reports:
HCA: Medicare represented 48.1% of first-quarter admissions, up from 47% last year. Commercial insurance accounted for 27.4% of first-quarter admissions, down from 28.6% last year.LifePoint Health: Medicare produced 39% of total revenue in the first quarter, up from 37.4% last year. Commercial payers accounted for 45.7% of total revenue in the quarter, down from 46.7% last year.Some financial analysts are partially attributing the rising proportion of Medicare patients to this year's flu season, which has been more severe than expected. But this is really about how more people are retiring and moving onto Medicare from their job-based insurance.
Why hospitals aren't thrilled about this shift: They prefer higher commercial rates instead of having to accept Medicare's lower fixed rates. However, Paul Ginsburg, a health economist at USC and the Brookings Institution, told Bob: "They still want Medicare patients because that's much better than having an empty bed." Also, don't be fooled: Hospitals do not charge private insurers more to make up for lower government payments, and low-cost hospitals can still make money on Medicare.