Hilton Head Hospital will lose $300,000 or more in state and federal funding because it failed to spend enough on care for low-income patients, according to a state formula.
A state investigation found that the hospital's cost of care for patients who were uninsured or on Medicaid was only 18.3 percent of its total care costs -- below the 20-percent mark the state requires for full funding.
Hilton Head Hospital typically receives money from a program designed to reward medical centers that provide high levels of uncompensated care. The state will cut eight percent of that funding to all 18 hospitals that failed to meet the standard. That will save South Carolina taxpayers about $2.6 million annually, according to Jeff Stensland, a spokesman for the S.C. Department of Health and Human Services.
The decision will cost Hilton Head Hospital nearly $300,000, Stensland said. However, a spokeswoman for the hospital said the expected reduction will be almost $400,000.
Neither amount is as much as what some other hospitals are facing. Anderson Area Medical Center and St. Francis Health System in Greenville stand to lose more than $1 million each.
The state had worked with hospitals for months to trim funding in a "fair and equitable" way, according to Stensland.
"The program is still rewarding hospitals who are providing a decent amount of care to people on Medicaid or uninsured, which is really who the program is for," Stensland said.
The program's payments do not completely cover hospitals' losses for providing indigent care. However, they reduce the burden on those that treat many patients who are either uninsured or enrolled in Medicaid, the government health insurance program for the poor and disabled.
Hilton Head Hospital's uncompensated-care cost in 2010 was about $24.5 million, according to hospital spokeswoman Kelly Presnell.
"While we fully understand the budget constraints, we have always believed ... that there are a myriad of more effective ways to reduce expenditures without reducing programs," read a statement from Presnell.
The new policy took effect Nov. 1 and will affect less than a third of the state's hospitals. Beaufort Memorial Hospital and Coastal Carolina Hospital in Hardeeville will not lose money under the amended program.
Renee Dudley of The (Charleston) Post & Courier contributed to this report.
Follow reporter Grant Martin at Twitter.com/LowCoBiz.