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Hospitals ailing with financial stress

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KAI RYSSDAL: Partisanship aside, health care reform is going to be as hard as it is because, well, there are trillions of dollars on the line. In a recession, though, perhaps not as many trillions as before. A study out today from Thomson Reuters finds most hospitals in this country are feeling the financial strains.

Janet Babin reports from the Marketplace Innovations Desk at North Carolina Public Radio.

JANET BABIN: If you’ve seen a hospital bill recently, you might find this hard to believe: Hospitals are losing money. The Thomson Reuters study reviewed data from about 5,000 facilities.

Gary Pickens was the study’s lead author:

Gary Pickens: About half of all hospitals are operating in the red. So this is an unprecedented historical phenomenon that we’re seeing.

Pickens says as more people lose their jobs, they also lose their health insurance. Patients without coverage usually pay less for the same hospital care. So hospital reimbursement rates have shrunk. Some patients are putting off procedures altogether.

And just like our 401K plans, hospital investment portfolios have lost a lot of their value.

Chris Ellington is chief financial officer at University of North Carolina hospitals:

Chris Ellington: All of our cash flow is being eaten up by losses in investments. And our investment portfolio was conservative to begin with.

Some hospitals have stopped offering certain procedures and trimmed staff. But they can only cut so far.

Dr. Alan Garber at the Center for Health Policy at Stanford University says hospitals will have to look for other ways to reduce expenses.

Alan Garber: That means delaying or canceling building projects, possibly delaying the purchase of expensive equipment.

As the recession continues, Ellington, at UNC, expects a hospital shakeout.

Ellington: There will be some winners and losers over the next year in health care, for sure.

The closures and consolidations could leave some communities without access to the latest medical technologies or key procedures.

I’m Janet Babin for Marketplace.

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