Hospitals Seeing Drop in Elective Procedures, Rise in Uncollected Debt
Some hospitals have said they are experiencing a decline in patient admissions as the recent economic downturn might have led some patients to defer major procedures and elective treatments that are among the most lucrative for hospitals and "tend to subsidize the charity care and unpaid medical bills that are increasing as a result of the slow economy," the New York Times reports.
For example, bad debt and charity care expenses at California hospitals increased from about $5.8 billion in 2005 to $7.1 billion last year.Â
An analysis by Kurt Salmon projects that the figure could hit $8 billion for 2008.
Overall inpatient hospital admissions were down by 2% to 3% in September compared with a year earlier, according to a survey of 112 not-for-profit hospitals by Citi Investment Research analyst Gary Taylor.
Taylor said that during the economic downturn, the "only way [patients] are going to tap the health care system is through the emergency room," when they no can longer delay treatment.
Some hospital industry experts say that patient admissions seem to have declined "more sharply" as "the economy has slid more steeply toward recession in recent weeks," the Times reports.
According to the Times, admission declines "may still seem relatively slight," but "hospital executives and consultants say it is already having a profound impact on many hospitals' profitability," because as "fewer paying customers show up, there has been a steady increase in the demand for services by patients without insurance or other financial wherewithal, many of whom show up at hospital emergency rooms."
The Times reports, "The situation is exposing a main vulnerability" of U.S. hospitals: "When there is a decline in profitable procedures paid for by private insurance, hospitals have less money to offset the relatively lower fees they receive from government insurance programs like Medicare and Medicaid."
Hospitals are trying to reduce costs by laying off workers, consolidating or closing facilities and halting new construction and development projects -- "an abrupt change for an industry traditionally seen as insulated from economic woes," the Times reports.
In addition to declining admission rates, credit market problems are affecting not-for-profit hospitals that rely on raising capital for new developments through the municipal bond market.
David Rock, a health care consultant at Carl Marks, predicts that hospitals soon will begin to re-evaluate and scale back on services they provide, paying particular attention to costly elective procedures, such as bariatric surgery. He said "It's safe to say hospitals are no longer recession-proof" (Abelson, New York Times, 11/7).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.