Assessing bad debt in New Hampshire and Vermont office-based practices.

Abstract

Objective: Bad debt is one measure of the cost of medical indigence on health care institutions. This two-part study identifies a methodology for and presents findings from measuring bad debt in a collection of office-based practices.

Methods: In Part I of the study, data were gathered on site from 26 practices in Sullivan County, New Hampshire, after first conducting a survey of bad debt losses at these offices. Survey findings were compared to on-site findings and it was determined that only the practices with computerized record-keeping systems were able to supply accurate data by survey alone. In Part II, 71 randomly chosen computerized practices in New Hampshire and Vermont (identified in a screen of 275 practices) were surveyed on bad debt.

Results: The practices from Part II wrote off an average of $23,115 per physician in 1990 from bad debt in a region in which primary care physician income averages approximately $70,000.

Conclusions: The author calculates that bad debt losses are greater than either Medicare or Medicaid losses. Uninsured patients account for 21.6% of office visits but 45% of practice write-offs. Bad debt accounts for a 16% loss from total earnings from regular office visits. Office-based practices in this study are shouldering a significant portion of the cost of care of their uninsured and underinsured patients.