MHA Press Room

HFMA: More than half of hospitals losing money

Fifty-four percent of hospitals had negative total margins during the first-quarter of fiscal year 2009, including 80% of hospitals with 500 or more beds, according to a nationally representative survey by the Healthcare Financial Management Association. Eight in 10 hospitals report declines in non-operating revenue since the economic recession began last summer, and seven in 10 report fewer days cash on hand. Four in 10 hospitals report a decline in net patient revenue and investment losses of 25% or more. The findings are consistent with data reported last month by the American Hospital Association.

Report: Recession hurting hospitals financially

The median total margin of U.S. hospitals fell to 0.1% in third-quarter 2008, driven largely by a decline in non-operating revenues, and about half of hospitals had a negative total margin, according to a study released March 2 by Thomson Reuters. The study tracks the impact of the recession based on financial data from a representative sample of 439 hospitals.

The company also reported slower growth in payments to hospitals from Medicare, Medicaid and private insurers, and historically low cash on hand. "Hospitals are facing unprecedented economic stress and many of the indicators we're seeing suggest that things will get worse before they get better," said lead author Gary Pickens, chief research officer for the company’s health care information business.

The study findings are consistent with data compiled by the American Hospital Association showing the negative impact the recession is having on hospitals.

Beyond healthcare: the economic contribution of hospitals

In 2007 hospitals employed nearly 5.3 million people and were the second largest source of private-sector jobs. In addition, hospitals spent about $304 billion on goods and services from other businesses, creating additional economic value for the community.

With these “ripple effects” included, each hospital job supports about two more jobs, and every dollar spent by a hospital supports roughly $2.30 of additional business activity. Overall, hospitals support nearly one of nine jobs in the United States and nearly $2 trillion in economic activity.

Download a PDF of Beyond Healthcare: The Economic Contribution of Hospitals, including a state-by-state breakdown, from the American Hospital Association.

Report: Hospitals face economic challenges in recession

Hospitals remain a source of health care, jobs and economic growth for communities across the country, but are not immune to the declining economy, according to a new AHA TrendWatch report. Medicaid enrollment and unemployment are increasing, but federal funding continues to fail to cover the costs of care.

“Consequently, hospitals’ financial health through the current downturn hinges upon adequate funding from these programs,” the report states. As payments to hospitals traditionally lag behind care delivery, hospitals often must borrow to meet operating expenses.

However, the credit crisis is making it difficult to secure financing for both day-to-day obligations and clinical and technological improvements. “Due to a combination of limited funding options, higher interest rates and worsening economic conditions, many hospitals are reconsidering or putting off replacing aging physical plants and upgrading technology,” the report adds.

Survey: Public views health care as priority for stimulus package

Americans rank action on health care as an important part of efforts to stem the impact of the economic recession, according to a national survey released Jan. 15 by the Kaiser Family Foundation and Harvard School of Public Health. Helping the newly unemployed afford health insurance coverage and providing states with more federal help to pay for health care for lower income residents were among American’s top three priorities for dealing with the economic recession.

These proposals ranked ahead of repairing the country’s infrastructure, cutting taxes for the middle class, helping people pay their mortgages and helping large businesses hurt by the recession. While improving the economy was Americans’ top priority for the new president and Congress, reforming health care ranked third, behind fighting terrorism and above reducing the federal budget deficit.

Report: Hospitals support nearly 1 in 9 U.S. jobs

Hospitals in 2007 employed 5.3 million people and supported nearly one-in-nine U.S. jobs, according to an American Hospital Association report released Jan. 12. The report updates an April 2008 AHA TrendWatch showing the economic contribution of hospitals by state, which was based on 2006 data.

In 2007, the health care sector, of which hospital care is the largest component, grew to 16.2% of Gross Domestic Product, or roughly $2.2 trillion, a 1.25% increase from 2006. “Hospitals’ importance to their communities goes beyond providing health care,” said AHA President and CEO Rich Umbdenstock. “They are also a source of jobs for millions of Americans. Hospitals’ financial health is a critical part of providing a steady source of income and employment for local residents.”

Hospitals healthy for the economy

Hospitals employ more than 5 million people and rank second as a source of private-sector jobs, according to a report released April 7 at the American Hospital Association’s annual meeting in Washington, D.C. Hospitals and their employees also purchase goods and services from other businesses, supporting nearly $1.9 trillion in economic activity.

In addition to economic benefits, hospitals offer an array of community services and provide free or reduced-cost health care services for patients with limited financial means. “Hospitals provide so much for a community,” said AHA President and CEO Rich Umbdenstock. “In addition to caring for the sick, hospitals provide jobs, good wages and benefits in the communities they serve.”

The report includes a state-by-state analysis of the economic contributions of hospitals to their communities.

Health care a key driver of U.S. economy and jobs

BusinessWeek reports in the magazine’s Sept. 25 cover story, “Health care has added 1.7 million jobs since 2001. The rest of the private sector? None.” While the number of private-sector jobs outside health care is no higher than it was five years ago, the magazine reports, hospitals and other employers in the health care field are propping up the economy.

The article cites for example Children’s Hospital of Philadelphia, which nearly doubled its workforce over six years as it added the equivalent of 4,000 new full-time jobs. “To put this in perspective, all the nonhealth-care businesses in the Philadelphia area combined added virtually no jobs over the same stretch,” the story adds. To see the story click "BW Magazine" at www.businessweek.com.

[ via AHA News Now ]

HFMA: Over half of hospitals struggling financially

According to a new Healthcare Financial Management Association (HFMA) study, over half of U.S. hospitals are facing financial struggles. Rural hospitals and those not affiliated with a health system--almost half of hospitals--are particularly at risk from competitors. Financial pitfalls come from many directions, including competition from doctor-owned facilities, lower government reimbursement rates, high debt and spending on necessary infrastructure and IT improvements. Some hospitals will thrive while others fail; this is determined by how much access to capital hospitals have. "Organizations that are relatively nimble and can seize emerging opportunities will continue to have fairly broad access to capital. Organizations at the other end of the spectrum are going to struggle. And organizations in the middle, with moderate capital access, will need to identify their areas of distinctive competence and focus their capital spending on these areas," notes Richard L. Clarke, president and CEO of HFMA. Seizing opportunities to cut programs that aren't working and offering better services are necessary for a hospital's survival.

For more on the HFMA study, read their press release.

[ via FierceHealthcare ]