Determinants of hospital bad debt: multivariate statistical analysis

Although the issue of uncompensated care (bad debt plus charity care) has been actively debated in the public arena, there has been little discussion of the bad debt issue alone. This issue is important since issues of bad debt, charity care and uncompensated care are significantly different from each other. Based on 1992 State of Missouri data, the results of our study indicate that more efficient hospitals (measured by occupancy rate), hospitals with more patients covered by prospective payment systems (measured by Medicare discharges), and for-profit hospitals incurred significantly less bad debt cost than other hospitals. However, the difference in bad debt between for-profit hospitals and not-for-profit hospitals is dissipated when using a multivariate statistical model. In addition, this study also reveals that hospitals which provide more charity care have the lowest bad debt costs. Policy implications are also discussed.