Hospitals That Serve Many Black Patients Have Lower Revenues and Profits: Structural Racism in Hospital Financing

Abstract

Abstract Background Care for Black patients is concentrated at a relatively small proportion of all US hospitals. Some previous studies have documented quality deficits at Black-serving hospitals, which may be due to inequities in financial resources for care. Objective To assess disparities in funding between hospitals associated with the proportion of Black patients that they serve. Participants All Medicare-participating hospitals, 2016–2018. Main Measures Patient care revenues and profits per patient day at Black-serving hospitals (the top 10% of hospitals ranked by the share of Black patients among all Medicare inpatients) and at other hospitals, unadjusted and adjusted for differences in case mix and hospital characteristics. Key Results Among the 574 Black-serving hospitals, an average of 43.7% of Medicare inpatients were Black, vs. 5.2% at the 5,166 other hospitals. Black-serving hospitals were slightly larger, and were more often urban, teaching, and for-profit or government (vs. non-profit) owned. Patient care revenues and profits averaged $1,736 and $−17 per patient day respectively at Black-serving hospitals vs. $2,213 and $126 per patient day at other hospitals (p<.001 for both comparisons). Adjusted for patient case mix and hospital characteristics, mean revenues were $283 lower/patient day (p<.001) and mean profits were $111/patient day lower (p<.001) at Black-serving hospitals. Equalizing reimbursement levels would have required $14 billion in additional payments to Black-serving hospitals in 2018, a mean of approximately $26 million per Black-serving hospital. Conclusions US hospital financing effectively assigns a lower dollar value to the care of Black patients. To reduce disparities in care, health financing reforms should eliminate the underpayment of hospitals serving a large share of Black patients.