Restrictive reimbursement policies and uncompensated care in California hospitals, 1981-1986

To examine the effect of restrictive state, federal, and private hospital reimbursement policies in California, we examined trends in uncompensated care and other deductions from hospital revenues from 1981 to 1986. During a period when the number of uninsured in California increased substantially, uncompensated care grew, but not as rapidly as other deductions from revenue, especially Medi-Cal and private-sector contractual allowances. A trend toward redistribution of uncompensated care from public to private hospitals reversed. Voluntary teaching hospitals, whose Medi-Cal and private-sector contractual allowances grew rapidly, recently reported a decline in uncompensated care. As reimbursement pressures increase, private hospitals may resist pressures to provide uncompensated care, increasing the burden on public institutions and perhaps limiting the access of indigents to quality care.