Declining admissions, growing bad debt, rising interest expenses, falling reimbursements, illiquid capital markets, layoffs, cutbacks, and crashing credit ratings…these are the co-morbidities of the American hospital-as-patient in the 2009 economy.
The American Hospital Association (AHA) has revisited its landmark survey on the U.S. hospital economy published in November, and today released The Economic Crisis: The Toll on the Patients and Communities Hospitals Serve.
AHA has found that the economy is having devastating consequences on both individual patients and the larger communities that the hospitals serve. 9 in 10 hospitals have made cutbacks to services by cutting staff, administrative expenses, and services including but not limited to mental health, post acute care, clinics and ambulatory programs, and patient education.
These cutbacks are not helping to buoy hospital operations. 45% of hospitals report that their ability to access capital since December 2008 continues to get worse. As the chart shows operating margins are fast eroding. Cash on hand is decreasing along with debt service coverage. Thus, 77% of hospitals have reduced capital spending in terms of scaling back planned projects or those in progress, deciding not to move forward with planned projects, and stopping projects already in process.
Data for this survey was collected in March 2009 and represents a broad sample of community hospitals.
Health Populi’s Hot Points: The declining macroeconomy has hit hospitals, and hit hard. While jobs in hospitals were still being created in early 2009, it is now clear that even the hospital sector has stopped creating jobs due to the downturn in hospital finances. Layoffs in the sector have begun.
Individual patients who can opt out of hospital admissions are doing so, which is directly impacting hospitals’ top-line revenues. Patients who come through the emergency department without insurance is increasing for 6 in 10 hospitals, and the proportion of patients unable to pay for care is growing for many hospitals: uncompensated care as a percent of total gross revenues is increasing for 70% of hospitals.
These economic impacts on hospitals’ local communities are substantial. In most communities, hospitals are in the top tier of the largest employers. Furthermore, cutbacks in services directly and negatively impact communities.
Hospitals are no longer the “recession-proof” industries they were once considered to be.