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Recession increases pressure on nation's medical centers ECONOMY: More patients are without insurance, adding to bottom line pressures By Melissa Evans, Staff Writer Posted: 12/06/2008 10:54:43 PM PST As the economic recession deepens, hospitals across the country are suffering a double-whammy - significant losses in investment proceeds and more costs treating a growing number of patients without insurance. Locally, the financial pressures aren't expected to lead to drastic action, such as wide-ranging layoffs or closures - at least, not yet. "I think every hospital CEO is watching the bottom line very closely right now," said Michael Hunn, chief executive officer at Little Company of Mary in Torrance. "Over time we are going to have to be very diligent." Little Company, along with Torrance Memorial Medical Center and Kaiser Permanente-Harbor City, are in fact forging ahead with ambitious building projects to bring facilities up to seismic standards and expand medical office space. But the financial health of Los Angeles County hospitals is a sensitive subject; more than 10 hospitals have closed over the last five years due to decreasing revenue and increasing costs, putting even more pressure on those still standing. The recent economic downturn doesn't help. Hospitals rely on a delicate mix of patients with private insurance, public Medi-Cal or Medicare and no insurance to balance their budgets. The bulk of those without insurance should ideally be treated at county facilities Advertisement such as Harbor-UCLA Medical Center near Torrance. But as more workers become unemployed, the higher volume of patients who can't pay threatens to push private facilities into the red. Roughly 60 percent of hospitals in Los Angeles County have seen a spike in the number of people without insurance over the last few months, said Jim Lott, executive director of the Hospital Association of Southern California, a trade group. "Patients are not paying their portion of hospital bills, or not at all, as the economy goes down," he said. A recent survey by the American Hospital Association paints an even bleaker nationwide picture. In a survey of 736 hospitals across the country, officials reported a combined investment loss of $832 million compared with a $396 million gain the previous quarter in 2007. Not surprisingly, overall profit margins dipped from an average gain of 6.1 percent in 2007 to a 1.6 percent loss this year. More than 70 percent of those hospitals are seeing declines in elective procedures, and 63 percent saw some decline in hospital admissions. Officials at Torrance Memorial and Kaiser say their patient census has actually been up recently; other hospitals say admissions have been steady. "That may be due in part to the bed shortage here," said Laura Schenasi, executive vice president of Torrance Memorial's foundation. "We have a great need in this community for beds because of all the closures, which is why we're moving forward with our building plans." Fitch Ratings, which assigns credit ratings to hospitals and other businesses, revised its outlook on not-for-profit hospitals last week from "stable" to "negative" due to losses on the stock market and other factors. Poor ratings affect a hospital's ability to borrow money and issue bonds, which are key to investing in large projects. The biggest impact locally, however, seems to be the decline in patients with private insurance - a normally lucrative source of revenue for hospitals. Officials say the effects of higher unemployment, now at 6.7 percent nationwide, are likely to be felt for months as people forgo care, seek public assistance or default on hefty hospital bills. "What we're planning for is a pretty significant impact during the first part of 2009," said Nancy Carlson, chief operating officer at Little Company of Mary in San Pedro. "I think we'll see some real reduction in volume as people try to save money on out-of-pocket expenses." Carlson stopped short of predicting layoffs, but said the hospital will be looking to cut costs wherever possible. "We will look at reducing things that aren't absolutely essential," she said. "We'll be prioritizing our capital projects. We just have less cash right now." Jan Boyd, executive director at Kaiser-Harbor City, said the hospital has begun reaching out to employees who have lost their employer coverage, offering them individual plans to keep their coverage. "It's important for people who lose their jobs to keep up on their health care and receive preventative care," she said. "That's what keeps you out of the hospital." The Vasek Polak Health Clinic in Hawthorne, a facility opened a year ago to help those without insurance, has seen a significant wave of new patients over the last few months. The clinic saw an average of about 269 monthly visits last winter, compared with 432 monthly visits in November. Hunn, of Little Company of Mary in Torrance, which runs the clinic, said the facility helps steer patients away from the emergency room, which can be far more costly for both the patient and hospital. "You should not ignore your health," he said, "even in times like this." Email Melissa Evans, Daily Breeze staff writer » Post Comment
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