Hospital Industry Braces For Tough Times

Health care workers often reassure themselves with the morbid joke that people will always get sick. And though the health care industry has been one of the strongest engines of the economy recently — adding jobs as other industries cut them — there's growing evidence that hospitals are not so immune to this recession.

Steve Tringale, who runs a national health care consulting firm in Boston, says in his 30 years in the business, he has never seen a financial situation like this.

"The recession is clearly hitting hospitals harder than it has in the past," Tringale says. "The factors which are driving the overall economic downturn have conspired in some ways to almost set up a perfect storm for hospitals."

He says there are several factors contributing to that storm: First, state budgets are tightening, so critical reimbursements to hospitals are shrinking. Second, as the economy weakens, people are losing their jobs — and their employer health insurance. Third, people are putting off medical care when they can.

Wally Glendye, who has a bad knee, is lined up for replacement surgery, but he says he can't afford the copays and deductible.

"It's been tough on the kids. I can't throw a ball to them anymore; I can't bend down to pick it up," Glendye says. "It's just the wrong time to spend money. If it was better, absolutely, but — it's not the time to play around. Not at all."

Opting Out Of Elective Procedures

Karen Nelson of the Massachusetts Hospital Association says there's another reason people like Glendye are putting off medical care.

"Because the economy is so lousy, patients are deferring elective procedures. They're afraid to leave their job — to be out for two or three weeks, and then to come back to find a pink slip."

It's not only elective procedures that are down. A recent survey from the American Hospital Association says two-thirds of hospitals are seeing lower patient admissions overall. And this is at a time when they were counting on an older population needing more care.

At Tufts Medical Center in Boston, the situation is made worse by another factor: the credit crunch. It's harder to get money to build a new hospital wing or buy better equipment.

CEO Ellen Zane says the sliding stock market has also hit the hospital's endowment, which funds medical research.

"When there are no gains, it's hard to support [research]," Zane says. "And it means that the clinical part of our enterprise has to — what I always say — speed up the treadmill."

That means asking employees to do more, even while Tufts cuts back on hiring. Zane has put expansion plans on hold, and she is urging doctors to cut back on travel for their medical research.

Doing More With Less

Changes like these are becoming common at hospitals across the country. Some are even laying off workers, including the venerable Massachusetts General Hospital in Boston.

Health care consultant Tringale says medical campuses are going to come out of this recession in worse financial and physical shape.

"Hospitals need new heating systems, new chillers; ORs need to be rehabbed; buildings need to be maintained — things like that," he says.

Tringale says he thinks most hospitals will find ways to save money without cutting the quality of care.

"You know, the longer the recession goes, the higher the risk is that [quality] starts to become an issue," Tringale says. "I don't think it's there right now."

Hospitals could get a helping hand from the incoming Obama administration. The president-elect's transition team says an economic stimulus package might include a boost in federal Medicaid dollars. That is giving hospitals some hope, in what otherwise appears to be a weak and bleak 2009.

Curt Nickisch reports for member station WBUR in Boston.

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