Hospitals' red ink spells cutbacks and layoffs - Connecticut

Until the economy ground to a halt and the stock market tumbled in the fall, Connecticut hospitals looked as if they might repel the worst of the recession. They don't see themselves that way anymore.

The oldest medical center in Fairfield County, Bridgeport Hospital, and Greenwich Hospital are laying off staff for the first time in more than a decade. Other hospitals are considering similar measures but won't publicly discuss plans until they are announced within their organization.

Altogether, Connecticut's hospitals lost more than $200 million in the first quarter of 2009, after reeling from a $156 million loss in the last quarter of 2008. That's equivalent to a a drop in total margin, the difference between net revenue and operating expenses, or an 11.5 percent loss. "This shocking financial drop during the past six months has put Connecticut hospitals in a severely compromised position," said Leslie Gianelli, a spokeswoman for the Connecticut Hospital Association. "While the healthcare sector has been often characterized as immune from recessionary pressures, this is clearly not the case. Hospitals are experiencing significant declines in operating income as well as dramatic non-operating investment income losses."

Exacerbating their financial plight, hospitals get shortchanged because the state underfunds Medicaid and General Assistance to the tune of more more than $255 million last year, and that forced Connecticut to forgo $127.5 million in federal matching dollars. And with their investment portfolios ailing, the gap beween what hospital care costs and what government reimburses widens further.

And with no new sources to cover their operating expenses, hospitals are turning inward, re-examining themselves. They are looking at staffing levels, travel expenses, conferences, and delaying or shelving capital equipment purchases to cut costs.

The healthcare sector employs 151,000 people of the 1.6 million employed in Connecticut. The state's hospitals contribute $12.2 billion to Connecticut's economy, close to 6 percent of Connecticut's 2007 gross state product. According to the

U.S. Bureau of Labor Statistics, hospital employment is no longer a growing sector of the economy. Nationally, twice as many hospitals conducted "mass layoffs," terminating 50 employees or more this February, compared to the same month last year, according to a recently released American Hospital Association survey, "The Economic Crisis: The Toll on Patients and Communities Hospitals Serve. The AHA study finds that nearly half the country's hospitals have reduced staff, 80 percent have slashed administrative expenses and an additional 20 percent have cut behavioral health, post-acute care, patient education and other community health services that require subsidies.

"We wish we were doing better from an operating standpoint," Bridgeport Hospital spokesman John Cappiello said. "When you add the losses from the stock market, which were substantial, and you see that these investments ordinarily defrayed operating losses, but they aren't anymore, it's trouble. The situation Bridgeport Hospital faces is one many of our surrounding medical establishments face."

Total operating revenue for the hospital in the first seven months of this fiscal year is about $199 million and it now expects a net budget shortfall of $8 million, down from its original projection of a $15 million gap. In the first quarter of this fiscal year, it lost more than $4 million from its investments.

The irony is these losses come at a time when patient volume in its emergency room is up 6 percent over the same time last year and the hospital has an expanded emergency department that Bridgeport Hospital President Bob Trefry acknowledges is "busier than ever" with staff treating close to 250 patients a day on an average day. At the same time admissions to the hospital's other departments are down 3 percent.

At St. Vincent's Medical Center in Bridgeport, emergency room visits are up slightly, and despite the recession, average "door-to-doctor" waiting time decreased from 109 minutes to 98 minutes over the past year in part because of new triage procedures for fast-tracking critically sick or wounded patients while diverting patients who are not in imminent danger to a non-urgent section of the emergency department. That means emergency department patients wait less -- about 11 minutes less on average -- to get treated at St. Vincent's.

"We don't turn anyone away in our emergency department," said Ronald J. Bianchi, St. Vincent's Medical Center corporate senior vice president. "We treat everyone who comes through our door. This is what it means to be a safety net. What our emergency department physicians notice lately is that the patients are younger, sicker, facing more chronic illnesses that have gone neglected, that could have been managed in a physician's office, but weren't either because that patient has no insurance, is underinsured or faces such high co-pays that they can't afford" doctors' visits and medication to control their condition.

"People are also putting off elective procedures," Bianchi said, a finding that hospital administrators throughout Connecticut echo, and those non-emergency procedures are among the services that generate profit for hospitals.

Self-paying patients, including those who have no insurance and those who are underinsured, make up close to 40 percent of the emergency department volume at Connecticut hospitals, a statistic that the American Hospital Association says reflects what it sees nationwide since the start of 2009 -- that the uninsured make up 45 percent of the emergency department visits.

Like its neighbor in the Park City, St. Vincent's has experienced operating losses, too. Since last April, the hospital's margin declined from $12.8 million to $9.5 million. It has no plans to reduce its 2,075-person staff. To make up for some of its investment portfolio losses and unreimbursed care, St. Vincent's will freeze merit-pay raises starting July 1, through June 30, 2010.

At Griffin Hospital in Derby, the arrival of increasing numbers of uninsured and self-paying patients has prompted hospital administrators to ask for some payments upfront for elective procedures, said Ken Roberts, a Griffin Hospital spokesman. "Given the economic climate everyone is facing, that seems the most practical time to request payment. After someone is discharged, it becomes harder."

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