Hospitals across California and the country are reeling from the effects of the economic downturn and the troubled financial markets.
Patients are putting off medical care because of job losses, job insecurity and high out-of-pocket expenses. As a result, the number of paying patients and profitable elective procedures is down. At the same time, the number of uninsured patients whom hospitals treat is rising.
Like just about everybody else, hospitals are losing money on their investments. To operate, they need to regularly borrow money. Yet now, when they need working capital the most, the credit markets are all but frozen.
And in California, low Medi-Cal reimbursements for poor patients and the state budget crisis are making matters worse.
The latest complications follow a dozen years during which more than 70 hospitals closed in California, and there is concern that some may not pull through this downturn.
"We've got a number of hospitals that are absolutely on the brink," said Jan Emerson, spokeswoman for the California Hospital Assn.
Financial analysts and insiders expect the turmoil to accelerate a shakeout.
"The weaker hospitals will continue to get weaker in a bad economy, and the stronger hospitals will find a way to survive and build market share," said Chris Van Gorder, chief executive of Scripps Health, a nonprofit chain of five hospitals in San Diego County.
Most alarming to hospital administrators, healthcare advocates and patients are the financial, economic and government crises all hitting at once.
Hospitals are facing a "triple whammy," said Anthony Wright, executive director of Health Access California, a patient advocacy organization. "You have the healthcare safety net seeing more uninsured people in the system at the same time employers are scaling back coverage. At the same time, the state is seeking to further cut healthcare programs."
Just about every hospital is affected in one way or another.
At Cedars-Sinai Medical Center in Los Angeles, financial counselors are dealing with a surge in patients with high-deductible health insurance who are unable to pay their share of the bill.
In Oceanside, Tri-City Medical Center is struggling to plug a reported $400,000-a-month hole blown in its budget by the sudden escalation of the cost of its debt.
And in Northern California, NorthBay Healthcare closed a $15-million projected shortfall by shuttering a pediatric hospital unit and an outpatient pediatric rehabilitation program with a waiting list of 100 children.
"It was a tearful closing, but we only saw more cuts coming down the line," said Steve Huddleston, director of public affairs for NorthBay of Fairfield, Calif. "We didn't see any light at the end of the tunnel."
Two-thirds of hospitals nationwide report experiencing a decline since July in elective procedures, which tend to be profit centers, according to a recent survey by the American Hospital Assn. Overall admissions also are down at more than a third of hospitals, reversing a long upward trend.
