The relationships among payers’ revenue to cost ratios (“margins”) suggest that cost-shifting occurs. Private pay margins are high when public pay margins, especially for Medicare, are low and vice versa.

Note: Payment-to-cost ratios indicate the degree to which payments from each payer covers the costs of treating that provider’s patients. Data are for community hospitals and cover all hospital services. Imputed values were used for missing data (about 35% of observations). Most Medicaid managed care patients are included in the private payers’ category.

Source: Adapted from the American Hospital Association and the Lewin Group TrendWatch Chartbook: Trends affecting Hospitals and Health Systems, 2006