Robert B. Murray, the cost review commission's longtime executive director, said he could not explain why the commission's formula underpaid eight Maryland hospitals for unpaid care for five straight years while providing surpluses to Johns Hopkins Hospital and Suburban Hospital in Bethesda each year. The formula envisions that hospitals will make money in some years but not in others, with the bottom line for each hospital evening out over time.
"It is a function of some things that are not quantifiable, like how efficient are they and how aggressive the individual hospitals are going after people," he said.
When The Sun asked the commission for data on revenue and costs of charity and unpaid care, the commission changed the figures three times over a period of two months, claiming that each previous set was wrong. The latest set of data shows that the hospitals as a group lost $6.6 million on unpaid and charity care in 2007, though they made surpluses in earlier years.
Twenty-five of the 47 hospitals are listed in the latest state database as having surpluses from free and unpaid care over the five-year period - and some of these institutions are among those that sue patients most often.
Each hospital reports to the commission annually the value of charity care it provided in the previous year, as well as a figure for "bad debt," the sum of bills which hospitals either can't or don't collect. The commission then uses a complex formula to estimate how much each hospital needs to add to its charges the following year in order to recover those losses.
But the hospitals do not report actual income from the rate formula. The commission does not know whether its revenue figures within a particular year are completely accurate, Murray and other commission officials acknowledged. "We don't know exactly what they collected," Murray said.
In a memo to its members, a copy of which was obtained by The Sun, the hospital association said that this lag can leave hospitals with losses on unpaid care if their costs increase faster than the revenue based on the rate formula. It also said that costs of charity and unpaid care have been increasing because of the poor economy and a rise in insurance plans with high deductibles that patients cannot afford to pay.The hospitals also say they collect less than the state's figures show.
