The Jan. 6 Press Herald article describing Northern Light Health’s turn to a for-profit corporation – Optum, which had a $101.3 billion profit in 2019 – for financial help highlights hospitals’ growing financial stresses.

One of the factors contributing to these stresses is the cost of managing billing in our multi-payer system. According to an article in BMC Health Services Research, 8.5% of hospital revenue goes towards these so-called billing- and insurance-related expenses. Northern Light’s revenues, in the 2021-2022 fiscal year, were noted to be $2 billion, suggesting they may have spent around $170 million on billing- and insurance-related expense that year.

That same BMC article puts billing- and insurance-related expenses in the “single-payer” Medicare and Medicaid systems at about 3.1%. 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).

Uncompensated care is another stress. I couldn’t find Northern Light’s figures for that, but according to the American Hospital Association, the cost to nonprofit hospitals of uncompensated care averages 13.9% of total expenses. If Northern Light’s total expenses approximate their revenues their uncompensated care would cost $278 million, an amount single-payer would eliminate.

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.

Daniel C. Bryant, M.D.
former staff physician, Mercy Hospital
Cape Elizabeth

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