Northern Light Health turning to a for-profit giant like Optum for "financial help" won't help it mitigate billing- and insurance-related costs and underscores hospitals' growing financial woes, Daniel Bryant, MD, a former physician at Mercy Hospital in Cape Elizabeth, Maine, wrote in a Jan. 10 article in the Press Herald.
One key factor contributing to hospitals' financial challenges is the cost of managing billing, with 8.5 percent of hospital revenue going toward billing and insurance costs, according to BMC Health Services Research.
In the 2021-2022 fiscal year, Brewer, Maine-based Northern Light's revenue was reportedly $2 billion, indicating it would have allocated about $170 million on such expenses that year. In the single-payer Medicare and Medicaid systems, the BMC study put billing and insurance expenses at about 3.1 percent.
"If Northern Light were operating in such a system, then they could have spent only $62 million on that expense, a savings of some $108 million (comparable to the projected $100 million savings with Optum)," according to Dr. Bryant.
Dr. Bryan pointed to uncompensated care as another financial stress, which equates to about 13.9 percent of nonprofit hospitals' total expenses, according to the American Hospital Association.
"If Northern Light's total expenses approximate their revenues, their uncompensated care would cost $278 million, an amount single-payer would eliminate," Dr. Bryan wrote. "Savings like these would certainly help with their $132 million operating losses. My figures may be off, and we don't know what single-payer costs to hospitals might be, but I would hope Northern Light would study the single-payer approach, rather than just rely on a for-profit corporation."