Healthcare In Crisis: Hospitals get grim financial news

Wednesday, June 10, 2009

Hospitals get grim financial news

Hospitals are suffering through the recession, many of them cutting staff for the first time, but some for-profit hospitals are doing surprisingly well, speakers said Friday at the annual South Florida Healthcare Summit.

More than 200 people attending the conference in Davie heard what was basically a grim financial outlook for their industry.

Caroline Rossi Steinberg, a trends specialist with the American Hospital Association, said 43 percent of hospitals surveyed reported a negative net return for the first quarter, compared with 26 percent for the same period last year.

Many doctors are also hurting, Steinberg said. Sixty-five percent of hospitals surveyed said they had seen increased numbers of doctors seeking employment, partnerships or help in purchasing equipment.

Darren P. Lehrich, Deutsche Bank's managing director of healthcare providers research, said for-profit hospitals had been popular with investors recently. ''For the last three months, hospital stocks are up 70 percent,'' he said, though he noted that they had fallen considerably before that.

Their bad debt -- primarily from uninsured patients -- was increasing at a slower rate than many analysts feared, Lehrich said.

Profit margins for for-profit hospitals were the highest they had been in three years, due primarily to lower costs. ''We saw labor costs sink like a stone,'' Lehrich said. Hospitals were cutting overtime and expensive contract workers. They were also using the economic crisis to squeeze wage reductions out of their staffs, which agreed to them ``for fear of losing their jobs.''

"That was a real surprise to us," Lehrich said.

Several speakers said the healthcare industry was closely watching the Obama healthcare reform efforts. If there is a public plan that helps reduce the number of uninsured, that could be a plus -- particularly to hospitals, Steinberg said.

If the public plan means people move from more expensive commercial plans to a cheaper government plan, with lower payment rates to hospitals, that could be a huge negative, Lehrich said.

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Statistics Collection

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