HCA Holdings 2011 Annual Report Download - page 116

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 1 — ACCOUNTING POLICIES (Continued)
Revenues (Continued)
to either stabilize the condition or make an appropriate transfer of the individual to a facility able to handle the
condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an
individual’s ability to pay for treatment. Federal and state laws and regulations, including but not limited to
EMTALA, require, and our commitment to providing quality patient care encourages, us to provide services to
patients who are financially unable to pay for the health care services they receive. Because we do not pursue
collection of amounts determined to qualify as charity care, they are not reported in revenues. Patients treated at
hospitals for nonelective care, who have income at or below 200% of the federal poverty level, are eligible for
charity care. The federal poverty level is established by the federal government and is based on income and
family size. We provide discounts to uninsured patients who do not qualify for Medicaid or charity care. These
discounts are similar to those provided to many local managed care plans. In implementing the discount policy,
we first attempt to qualify uninsured patients for Medicaid, other federal or state assistance or charity care. If an
uninsured patient does not qualify for these programs, the uninsured discount is applied.
The revenue deductions related to uninsured accounts (charity care and uninsured discounts) generally have
the inverse impact on the provision for doubtful accounts. To quantify the total impact of and trends related to
uninsured accounts, we believe it is beneficial to view charity care, uninsured discounts and the provision for
doubtful accounts in combination, rather than each separately. A summary of these amounts for the years ended
December 31, follows (dollars in millions):
2011 Ratio 2010 Ratio 2009 Ratio
Charity care .................................. $ 2,683 24% $2,337 24% $2,151 26%
Uninsured discounts ............................ 5,707 51 4,641 48 2,935 35
Provision for doubtful accounts ................... 2,824 25 2,648 28 3,276 39
Total uncompensated care ..................... $11,214 100% $9,626 100% $8,362 100%
A summary of the estimated cost of total uncompensated care for the years ended December 31, follows
(dollars in millions):
2011 2010 2009
Gross patient charges .................................. $141,516 $125,640 $115,682
Patient care costs (salaries and benefits, supplies, other
operating expenses and depreciation and amortization) ..... 25,554 23,870 22,975
Cost-to-charges ratio .................................. 18.1% 19.0% 19.9%
Total uncompensated care .............................. $ 11,214 $ 9,626 $ 8,362
Multiplied by the cost-to-charges ratio .................... 18.1% 19.0% 19.9%
Estimated cost of total uncompensated care ................ $ 2,030 $ 1,829 $ 1,664
The sum of charity care, uninsured discounts and the provision for doubtful accounts, as a percentage of the
sum of revenues, charity care, uninsured discounts and the provision for doubtful accounts increased from 23.8%
for 2009, to 25.6% for 2010 and to 27.4% for 2011. The trend of the three components of uncompensated care
indicates that increases to our uninsured discounts have resulted in the provision for doubtful accounts declining
from 39% of total uncompensated care for 2009 to 25% of total uncompensated care for 2011, and uninsured
discounts increasing from 35% of total uncompensated care for 2009 to 51% of total uncompensated care for 2011.
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