Calculating Uncompensated Care Costs

In order to more accurately uncompensated care across all hospitals, the American Hospital Association calculates bad debt and charity care on a cost basis. Use the following formula as a guide to gauge uncompensated care costs within your organization: 

• Uncompensated Care Charges = Bad Debt Charges + Charity Care Charges
• Cost-to-Charge Ratio = Total Expenses Exclusive to Bad Debt / Gross Patient Revenue + Other Operating Revenue
• Uncompensated Care Costs = Uncompensated Care Charges x Cost-to-Charge Ratio