The current economic state of the American consumer-citizen is directly impacting the fiscal health of the American hospital.

As fewer patients are seeking care for hospital services, providers are struggling to make ends meet. Over 50% of hospitals had a negative total margin in the fourth quarter of 2008; the year before, 31% of hospitals had a negative total margin.

The Colorado Hospital’s DATABANK project has compared financial data for 658 U.S. hospitals and published their findings in, The Impact of the Economic Crisis on Health Services for Patients and Communities.

While these data do not represent all U.S. hospitals, this report can be considered a bellwether for what’s happening in community hospitals throughout the U.S.

Admissions are down in hospitals for most services, including

  • Discharges (-0.5%)
  • Inpatient surgeries (-2.2%)
  • Emergency visits (-2.8%)
  • Ambulatory surgery (-1.0%).

The only area gaining volume between 4Q07 and 4Q08 was outpatient visits, growing 2.8% over the year.

Further exacerbating the downward financial picture of American hospitals is the fact that their investment income has fallen. The DATABANK report points out that investment income typically helps hospitals subsidize losses from patient care–especially Medicare and Medicaid which historically pay lower rates than patients with commercial insurance plans.

Health Populi’s Hot Points: As unemployment increases in communities, more citizens will become uninsured. Furthermore, signs for health coverage in 2010 among employers studied in the latest Hewitt survey of employers point to their plans to allocate even more costs for premiums, copays and coinsurance to the insured employee and dependents. This could further exacerbate the downward pressure on hospital finances in 2010 given what appears is some elastic demand for hospital services among consumers who are paying greater amounts of out-of-pocket expenses for care.