January 2009: Volume 36, Number 1
Hospitals Face an Uncertain Financial Future
A new report released by the American Hospital Association (AHA) describes the harsh toll the economic recession has taken on U.S. hospitals. Based on data from 2008 and 2009 AHA surveys, the report describes the full extent of the deterioration of the financial health of U.S. hospitals and indicates that a full recovery might not be possible for several years.
Hospitals have been hit from multiple angles due to the sluggish economy. Charitable donations reached their lowest point in 25 years, and the increase in unemployment resulted in fewer elective procedures and an increase in the number of patients seeking services they were unable to afford. Although the 2009 American Recovery and Reinvestment Act included provisions intended to assist hospitals, few reported an improved financial situation by the end of the first quarter of 2009.
The vast majority of hospitals surveyed—nearly 90%—report making changes to address economic concerns since 2008. High on the list of changes include cuts to administrative expenses and staffing. A significant percentage report reductions in services offered, mostly to those that tend to be poorly reimbursed such as post-acute care, clinics, and patient education. The recession has also affected hospitals’ access to tax-exempt bonds, forcing many to delay or cancel necessary upgrades to clinical and information technologies.
One bright spot in an otherwise dim diagnosis is that hospitals remain a reliable source of employment for many communities. Although many hospitals have shed workers, the industry as a whole added workers through August 2009 despite a decline in employment for the rest of the U.S. economy. Collectively, hospitals spend nearly $600 billion on employee compensation and other goods and services, money that often supports other economic activities in their communities.
A full copy of the report is available online.