The Current Recession and U.S. Hospitals

Source: Dennis Dunn, David Koepke, Gary Pickens, Center For Healthcare Improvement, February 2009

From the press release:
The median profit margin of U.S. hospitals has fallen to zero percent, according to a Thomson Reuters analysis of hospital finances published today. Driven largely by a decline in non-operating revenues, financial strains are apparent in all types of hospitals — small, medium and large community hospitals, teaching hospitals and major teaching hospitals.

The study tracks two dozen key financial indicators, using proprietary and public data to dissect the balance sheets of more than 400 hospitals nationwide. It evaluates trends in revenue and profit, employment levels, closures, inpatient volume, reimbursement rates, and frequency of elective medical treatments to gauge the fiscal health of the nation’s hospitals.
Following are the key findings of the analysis:

* Total Margin at Zero: The median total margin among the 439 hospitals in the study was zero percent in the third quarter of 2008 — an historically unprecedented low.
* In the Red: Approximately 50 percent of hospitals were unprofitable in the third quarter of 2008.
* Growth in Reimbursement Rates Shrinking: Payments hospitals received from Medicare, Medicaid and private insurers were growing at a declining rate through the end of 2008.
* Credit Crunch: Hospitals’ median cash-on-hand reached an historic low in the third quarter of 2008, demonstrating the impact of the credit crisis on liquidity. There was great variability in the median value of 110 days-cash-on-hand seen at that time — from 57 days for the lowest quartile of hospitals to 203 days for hospitals in the highest quartile.
* Stable Operations: Potential recessionary impacts that are not yet seen in the data include bed closures, mass layoffs, declining patient volumes, or a decline in elective procedures.
Survey: Recession Hits N.J. Hospitals Hard
Source: New Jersey Hospital Association
Growing Numbers of Patients Seek Care at California’s Public Hospitals as Economy Declines
Source: California Association of Public Hospitals and Health Systems
Proposed Cuts to California’s Public Hospitals: A Step in the Wrong Direction During Historic Economic Crisis
Source: California Association of Public Hospitals and Health Systems

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