The Medicare shortfall

I got a call this week from the office of Congressman Jim Walsh (NY-25). What, I was asked, does it cost for Community General Hospital to care for a Medicare patient? And how much do we get paid for that care? It’s an interesting question – and an interesting answer.

The average cost of care for each Medicare patient at CGH is $8,767. For that we are paid an average $6,612. That means our hospital loses $2,155 for each patient. And we take care of a lot of Medicare patients, some 4,600 a year.

How does a hospital make up such a loss? There are really only two sources : the payments we receive from commercial insurance companies and the funds donors give to the Community General Foundation. That’s a reason employers find their health insurance premiums so high each year. Part of their health insurance premium represents the extra amount it takes to help make up for shortfalls by government payers. It also explains why hospitals rely on charitable contributions.