Nevada Public Radio Listen Live

"This American Life"
Facebook Twitter Follow Nevada Public Radio

Support Nevada Public Radio
February 23, 2004

ARCHIVE: Hospital Profits


INTRO: Private hospitals around the state had significant profits last year according to an annual report released this month by the State Department of Health Care and Policy. In Clark County alone, hospital profits are up 141 percent and hospital bills in the state are rising 1 billion dollars a year.

PLASKON: If hospitals had collected on all 8 billion dollars worth of bills last year, they would have earned 5.5 billion dollars in profits. Instead, public and private hospitals combined only made 87 million dollars. Vernon Manke compiles hospital profit statistics for the state.

MANKE: The billed charges are no longer recognized as what the hospital earns as revenue.

PLASKON: The 8 billion dollars in hospital charges to patients last year are based on what's called Master Charge Lists. Each hospital sets their own list of prices for each service provided.

WELCH: The bottom line is you have to charge the same thing for everyone. That is the law.

PLASKON: Bill Welch is president and CEO of the Nevada Hospital Association. The hope is someone will pay those prices, but few do or can afford them. Because of that insurance companies have found a loophole.

WELCH: I acknowlege that you are going to collect a different amount for the same services from different payer groups.

PLASKON: The bills to patients last year amounting to 8 billion dollars is almost 6 thousand dollars for every patient Nevada hospitals saw. The amount hospitals actually collected is about 2 thousand dollars per patient. Few pay the higher cost because insurance companies and unions negotiate contracts with hospitals for services. But the hospitals still technically bill every patient, even though hospitals know they will only collect 30 percent of their billed charges.

RAWSON: I don't want to call it a game, but there is a situation.

PLASKON: Nevada Senator Ray Rawson says hospitals technically bill every patient to convince Medicare that bills spent to Medicare are the actual cost other people are paying. But like unions and insurance companies, Medicare also refuses to pay the full billed charges from hospitals. Medicare determines the cost it will pay for a service by a percentage of the average price hospitals charge across the nation. So Rawson says that's why hospitals bill such high prices - to raise the perceived average price for Medicare.

RAWSON: And so the hospital's bill, knowing that they won't get the billed charge, but that figures into figuring the master calculation for setting the Medicare rates and it is basically driving the Medicare rates up and so in a way it's a game. So there is a device to it that they are driving the rates up, people don't talk about it very much but that's why.

PLASKON: Using that devise, hospitals in Nevada have driven up billed charges by 1 billion dollars every year since 2001. The two largest private hospitals in Las Vegas wouldn't comment, but the Hospital Association says hospitals do it to make a profit. While Medicare is one target of high billed charges it's part of the mix of payers contributing to hospital profits through higher billed charges than most people play. Tourists pay the full billed charges for instance, because they have out of state insurance companies that don't have contracts with the hospitals here. Their payment of billed charges can make a big difference in hospital profits. This year profits are up 141 percent in Clark County, but up only 8 percent over 2001. County Manager Tom Reilly explains it's because profits shot up back then when tourists were stuck in Nevada after 9-11 paying the full rack rate.

REILLY: They didn't go to their preferred provider and they would have to pay billed charges here, ha, and so when that stopped that affected some of the revenues at hospitals too because they couldn't get those billed charges."

PLASKON: During that reporting period the three largest private hospitals in Clark County saw a 25 million dollar drop in profits. The County owned University Medical Center on the other hand, its profits alone dropped that much, not only that, while other hospitals still reported profits, UMC reported 20 million dollar losses. County manager Tom Reilly explains it's because Nevadan's lost their jobs and insurance but still needed health care and UMC was the only place to go.

REILLY: Private hospitals don't have a responsibility for the uninsured, that's what I would think is the big difference.

PLASKON: The uninsured are also part of the payer mix that determine hospital profits. The more uninsured a hospital serves, the lower the profits according to the Nevada Hospital Association. By federal law, private hospitals don't have to provide anything beyond emergency care to the uninsured. So the uninsured end up at UMC which spends approximately 24 percent of operating revenue on caring for them, that's compared to an average of only 3 percent of operating revenue spent at private hospitals on the uninsured. With the increasing population, the number of uninsured being funneled to UMC is also expected to increase. 62 percent of women who walk through these doors and climb these stairs to the Women's Center at UMC don't qualify for any insurance. The lobby is full of pregnant women watching The Ellen Degeneres Show. Since 2001 the number of uninsured outpatients UMC handles has increased from 28 percent to more than 40 percent last year. Reilly explains, that means the hospital has a shrinking number of paying customers and requires tens of millions of dollars every year in taxpayer subsidies to balance the hospital's budget.

REILLYL: So that becomes a real dilemma, as far as how as you balance to keep patients in there to pay for the patients who can't pay.

PLASKON: There are efforts to increase the number of paying patients however. This month a legislative heath care subcommittee met in Las Vegas with a plan to insure employees of small businesses which make up 70-80 percent of the uninsured according to Nevada Senator Ray Rawson. He serves on the committee and says providing health care for the uninsured will come at a cost and take some restructuring of funds.

RAWSON: We have to find some source of dollars that are now being spent on indigents and Clark County has a pretty big program for indigents, so we can use that money to bring in matching money to give insurance to those people with an actual policy.

PLASKON: While the effort may increase the number of insured and paying patients in the county there will also be more competition for those patients. Four new hospitals are to be built in the valley over the next year-and-a-half according to the Nevada Hospital Association. As long as UMC is taking the burden of the uninsured, the county manager says UMC will never make money. The county owned hospital's losses last year were 17 million dollars. County owned rural hospitals around the state lost 5 million. Meanwhile, the rest of the hospitals in Nevada made more than 100 million dollars in profit.

Ky Plaskon, News 88.9, KNPR

See discussion rules.


Apr 4, 2009 | Drug Donation Program
Nevada lawmakers are debating the creation of a program that would help cancer patients get expensive prescription drugs for less.

Mar 13, 2009 | Budget Wrangling
As state lawmakers wrestle with Nevada's multi-billion-dollar budget deficit, there are several plans afoot aimed at softening the next economic bust.

Mar 2, 2009 | Autism
The cost of treating children with autism can be $24,000 to $40,000 per child per year according to the Autism Coalition of Nevada. A bill before the Nevada Legislature aims to help families pay for the care.

Feb 16, 2007 | Chinese New Year
This weekend marks a celebration of Chinese New Year. KNPR's Rick Andrews reports on how the holiday is being celebrated by the valley's growing Asian community.

Dec 7, 2006 | Food and Beverage
The economy of scale for food and beverage operations in Las Vegas means any edge in efficiency is real money. Rick Andrews reports on a software product scoring with food and beverage managers looking at the bottom line...and what you're likely to order.

Nov 15, 2006 | Global Gaming Expo
The Global Gaming Expo trade show and conference got underway Tuesday in Las Vegas. Vendors showcase their latest wares including new slot machines.

Nov 1, 2006 | Stardust Memories
When it opened in 1958 the Stardust was the world's largest hotel. Now, after more than 48 years, it's closed.

Sep 27, 2006 | Nevada Northern Railway
The 'Nevada Northern' is celebrating its centenial anniversary. News 88.9's Rick Andrews went on a tour of the museum with executive director Mark Bassett.

Jun 30, 2006 | Standing Up for Ringo
Congresswoman Shelley Berkley tells the story of how she saw the Beatles in Las Vegas in August 1964.

Jun 29, 2006 | Sports Supplements
From fortified cereals to energy drinks to serious sports nutrition, people are willing to spend lots money to supplement their diets. Rick Andrews reports on the business of sports supplements.

May 25, 2006 | Love
Wednesday Cirque du Soleil provided a glimpse of their much anticipated show based on the music of the Beatles. Flo Rogers reports on Love.

May 24, 2006 | Telecommunications
A Senate telecommunications bill currently being considered includes provisions on most everything, but some worry that controversial measures will derail the entire package.

May 16, 2006 | Nanotech
Universities across the country are spending millions to expand nano technology research...manipulating molecules 10,000 times smaller than a human hair. Rick Andrews reports on nano research at UNLV.

Apr 24, 2006 | Earthscope
Hualapai Mountain Park, near Kingman, has been chosen by the National Science Foundation to be home to a seismic monitoring station. Gillian Ferris Kohl reports.

Apr 18, 2006 | Anatomical Donation for Science
In the second of two reports exploring innovative medical facilities in the Valley, Rick Andrews visits the Medical Education and Research Institute of Nevada in Henderson.

Apr 12, 2006 | Immigration Reform Stalled
Immigration legislation in the U.S. Senate is at a standstill. Many in the Republican Party blame Nevada Democrat, Senator Harry Reid for the impasse. Jill Morrison reports from Capitol Hill.

Apr 1, 2006 | New Plans for Nellis
The first of April brings news that a large piece of military land in Las Vegas may be redeveloped.

Mar 28, 2006 | Test Site Worker Compensation
Senator Harry Reid is trying to get compensation for Test Site workers who were exposed to dangerous levels of radiation, but never compensated.

Feb 27, 2006 | StoryCorps - Alice Keys
Alice Keys has been active in the African American community for decades and known through her association with the Moulin Rouge Casino. Here's her recollection of meeting one of the great African Americans of the last century.

Feb 21, 2006 | StoryCorps - Alan Morel and Mike Genoshe
When close friends interview each other, the stories are often more intimate and revealing than talking to a reporter. A case in point is Alan Morel and Mike Genoshe talking about their hopes for their adopted son.

Web hosting facilities provided by Switch.