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Direct Patient Care

The Health System participates in many government-sponsored insurance programs, including Medicare and Medicaid, where the payment we receive typically does not cover the cost of the care provided. We also provide care to patients with no insurance regardless of their ability to pay out-of-pocket.  In 2008, the Health System incurred losses (costs in excess of revenue) of approximately $170 million providing care to these populations:

Medicaid
$46,000,000
Medicare
$86,000,000
Other State/Local Programs
$16,000,000
Uninsured Patients*
$13,000,000
Subsidized Patient Care Programs
$9,000,000
Total
$170,000,000

*Charity Care and bad debt from uninsured (at cost)

It is estimated that more than 2.6 million Michigan residents do not have health insurance through their employer and cannot afford to purchase insurance.  Many of these residents qualify for state and local assistance programs, which provide for some or all of their health care needs. 

The largest such program is the Michigan Medicaid program, a program that is jointly funded by federal and state government.  More than 1.5 million people are currently enrolled in Michigan Medicaid. The Michigan Medicaid program reimburses hospitals and other licensed providers for care to its enrollees. However, most health care organizations in Michigan, including the U-M Health System, have Medicaid costs well in excess of Medicaid reimbursements.  In addition, we serve patients covered by Medicaid programs from other states, an effort that results in similar financial outcome. 

Based on 2007 data, the U-M Hospitals and Health Centers is in the top three in Medicaid patient activity, as measured by Medicaid hospital payments, of any individual hospital in the state and more than five times more Medicaid activity than the next largest hospital in Washtenaw County.

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Many Michigan counties, including Washtenaw, have programs to provide health coverage to its uninsured residents that meet the program’s criteria.  Washtenaw County has partnered with the University of Michigan to create two organizations – the Washtenaw Health Plan and the Washtenaw Community Health Organization - that improve access to health care for those residents who could not otherwise afford to do so. The Washtenaw Health Plan provides medical care coverage for low income individuals who are not eligible for other public assistance programs.  More than 9,241 county residents are enrolled in WHP, of which half receive their care from UMHS as of 9/30/08.  The Washtenaw Community Health Organization is a non-profit partnership between the County and University created to provide behavioral and physical health care services to county residents with mental illness, developmental disabilities and substance abuse problems.  The WCHO had 25,444 members.

Typically, as is the case for WHP and WCHO, these county programs do not have the resources to pay more than a small fraction of the costs incurred by providers.

Another very important government-administered program is Medicare, which provides health coverage for 1.5 million Michigan residents, primarily the elderly and disabled. For many of its 40 year of existence, Medicare’s reimbursement covered providers’ costs of care delivered to Medicare beneficiaries. However, since the mid 1990s, federal legislation has reduced reimbursement growth, resulting in payments that are now less than cost for most providers, including our Health System.

While federal, state and county plans provide coverage to many of Michigan’s vulnerable populations, it is estimated that there are nearly 1.1 million Michigan residents with no insurance who cannot qualify for these programs.  Usually these uninsured residents do not have the resources to pay for the very high cost of hospitalizations or outpatient treatment.  UMHHC provides care at no charge or at a significantly reduced charge to many such individuals, and an even larger amount of services to the uninsured which proved to be uncollectible.

More information for UMHS employees about our "charity care" policies (available from UMHS computers only).