COST: Hospitals Hurting in Economic Downturn

Long considered a recession-proof industry, hospitals have been increasingly hard hit by the economic downturn. That isn't good for the quality of health care. And it's another blow to local communities, where hospitals are often major employers.

In a country where losing your job very often means losing your health insurance, more Americans are delaying basic and necessary medical care. When they can wait no longer, too often they enter the health care system through the doors of the ER.

A new survey released Monday by the American Hospital Association captures these trends. The majority of hospitals report fewer patients are seeking inpatient and elective care. At the same time six out of ten hospitals report seeing a greater proportion of patients without insurance coming through their emergency departments and 70 percent report increasing rates of uncompensated care. (See chart below.) Those costs are made up, in part, by charging higher rates to insured patients.

"[P]eople put off care when they lose their job, which can complicate health care issues for many down the road," said AHA President and CEO Rich Umbdenstock in a press release. At the AHA conference where the report was released, Nancy-Ann DeParle, director of the White House Office of Health Reform, told listeners, "Across the country, the American people are demanding healthcare reform and refusing to accept more of the same."

Health care has been one of the few areas of job growth during the recession. That too may be ending. Hospital operating margins have decreased and nearly half of all hospitals surveyed had reduced staff to meet economic challenges. Such cuts impact both the health of our communities and the health of our economy. Health care spending accounts about one sixth of our nation's GDP with hospital spending accounting for close to one third of that. In many communities, as Jane Sarasohn-Kahn notes, "hospitals are in the top tier of the largest employers." The plight of hospitals during this economic downturn—made worse by the growing number of uninsured—should serve to further illustrate rebuilding our economy will require reforming health care.