Economy takes toll on state hospitals

(New Hampshire) While the fight over repeal of the nation’s health care reform law shows no sign of abating in the halls of Congress and state legislatures across the country, the New Hampshire Hospital Association released a survey earlier this week on the economic health of the state’s hospitals.

And as one might suspect in today’s stagnant economy, it’s not as robust as it used to be.

That’s the bottom line of “The Economic Crisis: The Toll on the Patients and Communities Hospitals Serve,” a 19-page report released Monday by the industry advocacy group based on its survey of all 26 acute care hospitals in New Hampshire. (The report is available at www.nhha.org).

Among the highlights from the November 2010 survey:

n Fifty-two percent are treating more patients without insurance in their emergency departments when compared to the previous year – and those reporting a “significant” jump was up by 16 percentage points.

n Forty-eight percent reported a significant or moderate increase in patients covered by Medicaid and other public programs that serve the state’s low-income residents.

n And 40 percent said they are facing a significant decrease in operating margins; that figure stood at 24 percent in April 2010.

“In a weak economy, hospitals’ role as part of the health care safety net in New Hampshire is more important than ever,” President Steve Ahnen said in a statement accompanying the report.

“Our survey’s results confirm that, in spite of the economic storm of the last couple of years, hospitals continue to serve the patients and communities who depend on them.”

But it certainly hasn’t come easy. During the November 2009 to November 2010 period, 95 percent of the hospitals reported making at least one change to cope with the new economic realities, 60 percent lowered administrative expenses, 40 percent cut staff and 16 percent reduced services. Freezing wages and cutting employee benefits also were part of the mix.

This has resulted in some hospitals postponing or scaling back new construction and renovation projects, though not nearly as much as in 2008, when almost half reported doing so.

Still, all this cost-cutting wasn’t enough to offset losses to some hospitals’ bottom lines. Eight of the state’s 26 hospitals reported operating in the red through the first nine months of last year, according to the survey, and operating margins for all hospitals dropped from 2.6 percent in 2009 to 1.8 percent last year.

As it turns out, Nashua’s two hospitals were among the healthier ones in the state, both exceeding the statewide average.

Southern New Hampshire Medical Center (+3.2 percent) and St. Joseph Hospital (+3.0 percent) were among 14 hospitals that reported margins up to 4.9 percent. The only three hospitals to exceed the 5 percent mark were Portsmouth Regional Hospital (+7.2 percent), Parkland Medical Center in Derry (+5.4 percent) and Upper Connecticut Valley Hospital in Colebrook (+5.2 percent).

Overall, the results of the New Hampshire hospital survey mirrored a national survey taken last spring, when the American Hospital Association reported that nearly three-quarters of the 572 hospitals surveyed had experienced lower operating margins than the previous year.

Ironically, while many New Hampshire hospitals are cutting programs and services in response to financial conditions, they report experiencing a growing need for more subsidized services.

More than half (52 percent) reported an increasing demand for clinics, screenings and outreach programs, which can became difficult to provide when operating margins are under pressure.

“Community need for care remains high, and in tough times, people in our communities turn to their local hospitals,” said Michelle McEwen, chairwoman of the board of trustees and CEO of Speare Memorial Hospital in Plymouth. “Hospitals face a difficult challenge trying to balance the growing needs of their communities with economic circumstances.”

Given the uncertainty of the economic recovery and the new health care reform law, we don’t see those challenges getting much easier over the next few years.

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