With nearly $50 billion vanishing from the balance sheets of American hospitals in a single year, bad debt isn't just a line item—it's a financial crisis bleeding the healthcare system dry.
Key Takeaways
- U.S. hospitals reported $49.7 billion in bad debt expenses in 2021.
- Bad debt accounted for 2.8% of net patient revenue for U.S. hospitals in 2022.
- Nationwide hospital bad debt write-offs increased by 12% from 2020 to 2021.
- Bad debt for community hospitals averaged 2.9% in 2022.
- Teaching hospitals reported 4.2% bad debt rate in 2021.
- Rural hospitals had 5.1% bad debt as % of revenue in 2022.
- California hospitals had $6.2 billion bad debt in 2021.
- Texas hospital bad debt averaged 4.5% of revenue in 2022.
- Florida bad debt for hospitals was $4.1 billion in 2023.
- Hospital bad debt rose 10% annually from 2018-2022.
- Bad debt was 2.1% of revenue in 2015, up to 3.0% in 2020.
- From 2019-2021, national bad debt increased 22%.
- Hospital bad debt projected to reach $60B by 2025.
- Bad debt expected to average 3.5% of revenue through 2026.
- AI-driven collections could reduce bad debt 20% by 2027.
Hospital bad debt is a growing financial burden reaching nearly $50 billion annually.
By Hospital Type
- Bad debt for community hospitals averaged 2.9% in 2022.
- Teaching hospitals reported 4.2% bad debt rate in 2021.
- Rural hospitals had 5.1% bad debt as % of revenue in 2022.
- For-profit hospitals' bad debt was $12.3 billion in 2021.
- Nonprofit hospitals averaged 3.0% bad debt expense in 2023.
- Critical access hospitals saw 6.8% bad debt rate in 2022.
- Urban hospitals' bad debt per discharge was $950 in 2021.
- Safety-net hospitals had 7.2% bad debt in FY2022.
- Children's hospitals reported 2.1% bad debt rate in 2023.
- Psychiatric hospitals averaged $2.5M bad debt per facility in 2022.
- Large hospitals (>500 beds) had 3.4% bad debt in 2021.
- Medium hospitals (100-499 beds) bad debt $3.8M average in 2022.
- Small hospitals (<100 beds) saw 4.9% bad debt rate in 2023.
- Cancer centers averaged 2.7% bad debt in 2021.
- Orthopedic specialty hospitals had 1.8% bad debt in 2022.
- Cardiac hospitals reported $1.9M bad debt per site in 2023.
By Hospital Type Interpretation
The hospital industry's bad debt landscape forms a distressing diagnostic chart where the most critical and rural patients are ironically prescribed the heaviest financial burden, while specialty centers enjoy a comparatively clean bill of fiscal health.
By Region/State
- California hospitals had $6.2 billion bad debt in 2021.
- Texas hospital bad debt averaged 4.5% of revenue in 2022.
- Florida bad debt for hospitals was $4.1 billion in 2023.
- New York hospitals reported 3.7% bad debt rate in 2021.
- Illinois hospital bad debt totaled $2.9 billion FY2022.
- Pennsylvania averaged $1.8M bad debt per hospital in 2023.
- Ohio hospitals saw 5.3% bad debt in Medicaid patients 2022.
- Georgia bad debt expense up 18% in 2021.
- Michigan hospitals had 4.0% bad debt rate in 2023.
- North Carolina rural bad debt 6.2% in 2022.
- Washington state hospitals $1.2B bad debt 2021.
- Massachusetts averaged 2.9% bad debt in 2023.
- Arizona hospitals bad debt $900M in FY2022.
- Tennessee saw 4.8% bad debt rate 2021.
- Kentucky hospitals $1.1B bad debt in 2022.
- Louisiana bad debt averaged 5.6% in 2023.
- Alabama hospital bad debt up 14% 2021-2022.
By Region/State Interpretation
A grim continental diagnosis reveals a healthcare system hemorrhaging billions, from California's $6.2B open wound to Louisiana's 5.6% fever, with the patient—often the uninsured or underinsured—left holding the bill.
Future Projections and Factors
- Hospital bad debt projected to reach $60B by 2025.
- Bad debt expected to average 3.5% of revenue through 2026.
- AI-driven collections could reduce bad debt 20% by 2027.
- Medicaid expansion to cut bad debt 15% by 2025.
- Inflation to drive bad debt up 7% annually to 2028.
- Self-pay bad debt projected at 45% of total by 2026.
- Rural hospital closures to increase bad debt 25% by 2025.
- Tech investments to recover 25% more bad debt by 2027.
- Uninsured rate drop to lower bad debt $10B by 2026.
- Commercial denial rates to boost bad debt 10% by 2025.
- Patient financial engagement to cut bad debt 18% post-2024.
- Bad debt per discharge expected $1,500 by 2028.
- 75% of hospitals predict bad debt rise in 2025 survey.
- Regulatory changes to reduce bad debt 12% by 2026.
- Economic recession to add $15B bad debt by 2027.
Future Projections and Factors Interpretation
While the healthcare system is frantically pulling revenue levers and patching holes with technology and policy, the dam of patient debt keeps threatening to burst, proving that the business of saving lives is often at war with the economics of getting paid for it.
Historical Trends
- Hospital bad debt rose 10% annually from 2018-2022.
- Bad debt was 2.1% of revenue in 2015, up to 3.0% in 2020.
- From 2019-2021, national bad debt increased 22%.
- Pre-COVID bad debt averaged 2.5% (2017-2019).
- 2016 hospital bad debt totaled $38 billion nationally.
- Bad debt growth slowed to 5% from 2015-2018.
- In 2014, average recovery rate was 18%.
- 2020 saw 28% spike in bad debt due to pandemic.
- From 2012-2019, bad debt per hospital doubled.
- 2013 national bad debt $35.2 billion.
- Bad debt as % revenue stable at 2.9% 2016-2018.
- 2017 rural bad debt rose 11% YoY.
- Pre-ACA bad debt averaged 4.5% in 2010.
- 2019 bad debt recovery improved to 16%.
Historical Trends Interpretation
Despite some modest pre-pandemic plateaus, hospital bad debt has been climbing a steepening hill, culminating in a 28% COVID-driven cliff in 2020, proving that while the recovery rate may limp along at 16%, the patient's ability to pay is in critical condition.
US National Averages
- U.S. hospitals reported $49.7 billion in bad debt expenses in 2021.
- Bad debt accounted for 2.8% of net patient revenue for U.S. hospitals in 2022.
- Nationwide hospital bad debt write-offs increased by 12% from 2020 to 2021.
- Average bad debt per U.S. hospital was $4.2 million in 2020.
- 65% of U.S. hospitals saw bad debt rise post-COVID in 2022.
- National bad debt recovery rate for hospitals averaged 15% in 2023.
- U.S. hospital bad debt totaled 3.1% of gross revenue in FY2022.
- Bad debt expense grew 8% year-over-year nationally in 2021.
- 72% of U.S. hospitals reported bad debt over 2% of revenue in 2022.
- National average days in A/R for bad debt was 120 days in 2023.
- U.S. hospitals' bad debt as % of collections was 4.1% in 2020.
- Bad debt provisions reached $54 billion across U.S. hospitals in 2022.
- 55% of national bad debt linked to commercial payers in 2021.
- Average bad debt per inpatient stay nationally was $1,200 in 2022.
- U.S. bad debt rate hit 5.2% for uninsured patients in 2023.
- National hospital bad debt expense per bed was $280,000 in 2021.
- 68% of U.S. hospitals collect less than 20% of bad debt in 2022.
- Bad debt from self-pay patients averaged 40% of total in 2021 nationally.
- U.S. average bad debt reserve was 3.5% of revenue in FY2023.
- National bad debt growth was 15% from 2019-2022.
- U.S. hospitals reported $49.7 billion in bad debt expenses in 2021.
- Bad debt accounted for 2.8% of net patient revenue for U.S. hospitals in 2022.
- Nationwide hospital bad debt write-offs increased by 12% from 2020 to 2021.
- Average bad debt per U.S. hospital was $4.2 million in 2020.
- 65% of U.S. hospitals saw bad debt rise post-COVID in 2022.
- National bad debt recovery rate for hospitals averaged 15% in 2023.
- U.S. hospital bad debt totaled 3.1% of gross revenue in FY2022.
- Bad debt expense grew 8% year-over-year nationally in 2021.
- 72% of U.S. hospitals reported bad debt over 2% of revenue in 2022.
US National Averages Interpretation
While $49.7 billion in bad debt might look like just 2.8% of revenue to an accountant, for American hospitals it's a persistent and growing hemorrhage where most unpaid bills turn into a permanent write-off, proving that in healthcare, the only thing spreading faster than a virus is the bill that nobody pays.
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