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Many patients delay procedures or can't afford to pay their bills
Published on Friday, Nov 21, 2008
The nation's ailing economy is hurting hospitals as more people put off elective procedures or can't pay for the care they receive, according to a new report.
Hospitals also have been hurt by losses on their investments because of the turmoil on Wall Street, and many are finding it more expensive to borrow money — if they can do so at all, according to a report from the American Hospital Association, which represents about 5,000 U.S. hospitals.
''The worst part is the combination of all of the above,'' said Rich Umbdenstock, the association's president and chief executive.
Some of the hardest-hit hospitals began reducing staffing and services as early as last spring and more will follow, although hospitals are trying to limit the impact on patients, Umbdenstock said.
None of Akron's hospitals indicated Thursday that they are making any staff cuts or reducing any services at this time.
However, officials at Akron General Medical Center and Akron Children's Hospital said they are seeing an increase in patients who can't pay their bills.
''We're seeing the same challenges as everybody else,'' said Debbie Gorbach, Akron General's interim senior vice president of finance and chief financial officer. ''We're seeing a lot more charity care. That's really started to increase.''
Akron General has seen a 15 percent increase in the amount of dollars written off as bad debt the first nine months of this year compared to the same period in 2007. The hospital also reported a 15 percent increase in adjustments due to bankruptcy; a 20 percent increase in charity-care adjustments and an 8 percent increase in payment plans.
Controlling costs
The hospital is trying to control its costs and not filling open positions whenever possible, Gorbach said.
And to help patients cope with medical bills, she said, Akron General recently hired financial counselors to work in the emergency department, ''where a lot of the charity care starts.''
Likewise, Akron Children's Hospital is hiring additional financial counselors to work with families who are uninsured or underinsured, said Robin DeFago, the hospital's director of revenue cycle.
The hospital also is making efforts to help families determine immediately whether they qualify for government health insurance programs, she said.
''The volume of people who are making applications to government programs and charity care are not just those who don't have insurance,'' she said. ''It's people who have insurance but they have a $1,000 deductible, a $5,000 deductible.''
The downturn is hitting hospitals worse than other industries, Umbdenstock said, and many already were struggling under pressures, including government programs such as Medicare and Medicaid not paying the full cost of treatment.
A survey about conditions over the past three months drew responses from 736 hospitals, and the association report also uses figures from the July-September period collected from 557 hospitals that send quarterly reports to a central system run by the Colorado Hospital Association.
The Databank hospitals' investment results amounted to a combined loss of $832 million, compared with a $396 million gain a year earlier. That's considered a big problem because normally investment gains help make up for some of the costs not covered by patients and insurers.
Meanwhile, the interest hospitals nationwide paid on borrowed funds jumped by 15 percent in the third quarter, compared to 2007's third quarter, another difficult squeeze because hospitals generally borrow money for expansions and upgrades, multimillion-dollar technology and even sometimes to cover payroll and pay regular vendors.
Summa Health System saw a short-term spike in September and October in interest payments on its variable-rate loans, which account for about a third of its debt, said Michael Rutherford, Summa's chief financial officer. Those rates have since dropped.
The health system, which is Summit County's largest employer, is relying on short-term lines of credit instead of long-term fixed-rate ''until the market stabilizes'' and interest rates drop, he said. But no building projects are being delayed.
Other findings
Other key findings from the national study:
• 67 percent of hospitals saw some drop in elective procedures; 6 percent saw a significant drop.
• 63 percent saw some decline in overall admissions; 9 percent saw a bigger drop.
• Inpatient and outpatient surgeries and emergency department visits were all down roughly 1 percent in the third quarter.
• Half of hospitals have seen a moderate or significant jump in uncompensated care, with a jump averaging 8 percent. The association cites unemployed people losing their health insurance.
• Total profit margin at the Database hospitals dropped from an average 6.1 percent in 2007's third quarter to an average loss of 1.6 percent in 2008's third quarter.
• 56 percent of hospitals are reconsidering or postponing renovations or expansions, and about 40 percent are delaying improvements to information technology or other equipment.
The nation's ailing economy is hurting hospitals as more people put off elective procedures or can't pay for the care they receive, according to a new report.
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