St. Vincent’s Closure Highlights Problem of Uncompensated Care

Manhattan’s St. Vincent’s Hospital has been closed due to an inability to find a solution to its $700M debt.  This venerable institution has treated people in need predating the sinking of the Titanic.  In fact, it treated victims of that 1912 disaster.  But ultimately, it could not keep itself from sinking under the debt caused in large part by the cost of providing uncompensated care. 

With St. Vincent’s closed, nearby hospitals will receive those patients and hopefully, the effect on patients will be minimal.  Bellevue Hospital reportedly saw a 13% increase in its E.R. visits in the week prior to the closure of St. Vincent’s. 

The problem is that a large proportion the emergency patients served by St. Vincent’s were either uninsured or underinsured.  Now, those patients will be absorbed by the surrounding hospitals.  So those institutions will have to offset these costs as best that they can.  For institutions already at financial risk, this will be an unwelcome burden.

Emergency care in America is mandated, but not funded, through the EMTALA law.  The law has a noble purpose, but presents a great risk to hospitals.  A hospital that cannot manage the cost of emergency care will face the risk of closure.  Surrounding hospitals will then take on the losses experienced by the first failed institution.  Unless this problem is addressed, what was seen at St. Vincent’s (and is currently playing out in Miami), will continue at other medical centers.  Patients are already being harmed by this problem, though fortunately not on a widespread or routine basis – yet. 

Kenneth Cohn MD, MBA, FACS made an excellent point in the first slide of his healthcare reform overview when he stated “Uncompensated care is never free”. 

The cost of uncompensated care is an operating expense that is getting more and more difficult to offset.   The addition of better paying service lines is not an automatic answer, because it can result in community oversupply and a misallocation of resources.  Increased efficiency is very important, but can only go so far.  Recovery of costs from emergency patients is increasingly difficult in a tough economy. 

Without a serious discussion regarding unfunded emergency care, we will likely see additional hospitals go the way of St. Vincent’s. 

Maintaining a properly functioning emergency care network is a critical goal of our healthcare system.  The current system is not working, and patient safety demands that the issue not only be addressed, but solved.


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One response to “St. Vincent’s Closure Highlights Problem of Uncompensated Care”

  1. Kenneth Cohn, M.D. says :

    Excellent post Tom and great focus on the intersection of surgery and business; this should be required reading for anyone in surgery; I have linked my blog to your site to alert my readers to this unique source.

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