As North Carolina's safety-net health care system, UNC Health Care proudly serves all North Carolinians, regardless of their ability to pay. To fulfill this mission, we constantly manage the finances of this institution to ensure we can meet the increasing demands on our charity care program while also educating the next generation of physicians and conducting leading medical research. It is a careful balance that forces us to face new challenges in how we collect payment for the services we provide and how we provide that care to the under- and uninsured.
To ensure sound financial management of our clinical operations, we recently began requiring payment for procedures at the time care is provided. For example, patients who come to UNC for gastrointestinal procedures receive a letter before their appointment that tells them an estimate of their out-of-pocket expenses, which is generally equivalent to their insurance deductible. Then they are asked to pay at the time of this service.
The amount we collect from our patients should be no more than what they are responsible to pay under their insurance plans. In order to ensure that we do not burden our more vulnerable patients, we exempt individuals who receive UNC Health Care System financial assistance, who receive Medicaid benefits, or who have two or more types of health insurance.
This new policy is a change in our practice, but it is common for hospitals and doctors to require pre-payment for procedures these days.
Let me explain why we are doing this now.
Over the last 15 years, UNC Health Care has confronted difficult financial challenges. State support for our institution has decreased markedly as a portion of our overall activities. Meanwhile, our payments from insurance companies have been constrained, especially for surgical specialties. In addition, the costs of clinical services have increased substantially. Moreover, the level of uncompensated care we provide now exceeds $175 million annually.
The combination of our charity care and our education expenses causes UNC Health Care to have much higher operating costs than many private sector institutions. Given today's health care environment, we simply have to be much more intentional about our fiscal operations if we are going to be able to serve our mission on behalf of the people of North Carolina.
The key to implementing this program in a patient friendly way is for our people to do their work up front communicate with our patients, gather detailed financial information, and make sure to arrange a payment plan from the outset for qualified patients. At the same time, we have established an automatic discount for patients with no insurance and a comprehensive charity care plan to help the families we serve get the care they need.
UNC Health Care is committed to providing our communities with the highest standard of care. The pre-payment policy is one way to ensure we can continue this commitment in a sound and responsible manner.