Sep 1, 2015
Where does KSB Hospital’s money come from? (PART 1) – by KSB Hospital Chief Financial Officer Tony Evers
As illustrated below, the hospital revenues fall into 3 main categories:
• Inpatient. “Room and board” when patients are actually admitted and stay overnight, – along with medications and other services.
• Outpatient. When you get a lab test, x-ray or attend physical therapy, along with other procedures not requiring an overnight stay.
• Physician Services. When you see a physician for a checkup or interpretation of a test.
In most cases, the majority of the hospital bill is not paid for directly by the patient, but rather by the health insurance company the patient’s employer uses, commonly termed “the payer:. These third-party payers fall into two main categories: private and government.
Private payers account for nearly 35percent of KSB revenue (compared to the U.S. average of 70 percent). Individuals with employer-based coverage typically share the cost of the insurance premium.
Medicare and Medicaid are the two largest government payers, comprising 44 percent and 14percent of KSB revenue, respectively. In comparison, the U.S. average of these combined payers is 25 percent.
Additionally, the small percentage of uninsured individuals who have the ability to pay for some or all of their healthcare costs out-of-pocket fall into the final payer group. At KSB Hospital, self-pay patients make up about 7 percent of our revenue. The U.S. average is 5 percent.
Although all patients receive the same charge for like services, the amount actually received varies greatly based upon the type of service and the payer. The chart below highlights the payment received for the same $1.00 in revenue. As an example, Medicaid reimburses KSB roughly 10 cents for every $1.00 in revenue (or 10percent).