Healthcare In Crisis: Economy Hitting California Hospitals Hard

Tuesday, January 13, 2009

Economy Hitting California Hospitals Hard

The economic recession is having a dramatic impact on California's hospitals, according to a new report by the California Hospital Association.

"As more people lose their jobs in this declining economy, they also are losing their job-based health insurance," said CHA President and CEO Duane Dauner. "The growing number of uninsured patients, coupled with inadequate Medi-Cal payments and the ripple effects of the financial market crisis, is leading to a decline in the financial health of California's hospitals at the very time when demand for health care services is growing."

As examples, hospital chief financial officers report a 73 percent increase in consumers having difficulty paying out-of-pocket health care costs, and a 33 percent increase in emergency department visits for uninsured patients. More than one-quarter of hospitals report the inability to access financing for construction, equipment or working capital, with 41 percent halting construction projects or equipment purchases.

Elective procedures are down 30 percent, threatening an important revenue stream.

Another burden on hospitals infrastructure is the state's seismic upgrade requirements, which are also in jeopardy because of the economic crisis, with 38 percent of institutions reporting that they will be unable to meet the 2013 and 2015 deadlines.

California hospitals are also strained by caring for elderly and low-income patients. For example Medicare reimbursement falls $3.5 billion short of the costs of providing care. The Medi-Cal program has fallen short by more than $3.7 billion. All told, hospitals are absorbing more than $10 billion each year in charity care costs.

The state can't risk hospital closings because it ranks 49th nationally in hospital bed availability.

The report is based on a November 2008 survey of chief financial officers.

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Statistics Collection

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