Hospital Payment Data Highlights Racial Biases in Healthcare

"U.S. hospital financing effectively assigns a lower dollar value to the care of Black patients," says a study in the Journal of General Internal Medicine.

According to a recent study, hospitals participating in Medicare coverage that are also treating a majority of Black patients have received the lowest payments between 2016 and 2018.

The study, written by a group of MDs and PhDs in the Journal of General Internal Medicine, concluded that "U.S. hospital financing effectively assigns a lower dollar value to the care of Black patients." Hospitals serving Black patients typically receive smaller payments for patient care and accrue lower profits and surpluses in comparison to other hospitals. This continuing disparity reinforces inequities in resources and care that already severely impact the Black community.

Patient care revenues and profits averaged $1,736 and negative $17 per patient day respectively at Black-serving hospitals versus $2,213 and $126 per patient day at other hospitals, according to the study. When adjusting for patient case mix and hospital characteristics, mean revenues were $283 lower per patient day, and mean profits were $111 per patient day lower at Black-serving hospitals. To equalize the reimbursement levels would have meant an additional $14 billion in payments to Black-serving hospitals in 2018, which works out to a mean of approximately $26 million per Black-serving hospital.

"Hospitals, where Black patients account for a large share of inpatients, have relatively modest facilities (as measured by the dollar value of their buildings and equipment), and they are less likely than other hospitals to offer some lucrative higher-tech services like cardiac catheterization lab," the study says. "These asset deficits reflect longstanding disparities in funding: decades- and even centuries-long paucity of donations, government subsidies, and operating surpluses to finance hospital construction in Black neighborhoods."

To address the inequities facing Black serving hospitals, the authors of the study are petitioning that greater investments be made in hospitals serving Black communities and that hospitals and health systems take a harder look at their treatment requirements and policies, which may be discriminatory, regardless of intention.

"We find evidence of disparate impact, indicating that the current system of hospital financing is a form of structural racism," the study says. "Health financing reforms should assure that hospital payment reflects patients’ care needs rather than their race and repair the damage of past policies by preferentially directing new capital funds to resource-starved facilities that have long served Black communities."