In a very underpublicized announcement, the American Hospital Association (AHA) released figures in November 2008 illustrating that U.S. community hospitals enjoyed record profits in 2007, posting $43 billion more in revenue than expenses and creating the largest single-year jump in profit margins in at least 15 years. Carried as an online news bulletin by the magazine Modern Healthcare, the facts were buried quickly by the AHA, as they can't be readily found today on the AHA web site.
Deep into 2008, both for-profits and not-for-profits generally continued strong financial results. The for-profit chains such as HCA, Community Health Systems (CHS), and Universal Health Systems (UHS) all reported relatively strong earnings for the first six months. CHS generated $5.4 billion in net operating revenues for the six months ended June 30, 2008, and $108 million in net income, consistent with the same period prior year. Similarly, UHS' net income increased by $14 million to $116 million during the first six months of the year, compared to only $102 million for the same period prior year. The Hospital Review Magazine reported in its "15 Healthcare Trends and Observations" in November 2008 that there are approximately 1,000 - 1,500 hospitals in the country that are considered "extremely healthy."
Meanwhile, the current economic crisis upon our nation has already left its mark on at least state-owned hospitals dependent upon government funding and its tax revenue base. The Medical University of South Carolina, a flagship institution and one of the state's two schools of medicine, located in the same city as our national headquarters, Charleston, is one of those affected. Spending is frozen, as are new hires for unfilled positions. Layoffs have been announced and departments are bracing for another round of budget cuts.
In other parts of the country, rural and critical-access hospitals lack substantial volume and higher-acuity services, and tend to be struggling. The hospitals most likely to go bankrupt include some of the urban hospitals that have a difficult reimbursement mix and hospitals that are smaller but are large enough to have serious overhead, according to the magazine.
To be healthy financially is one thing. But we don't need a hospital sector that throws off $43 billion in in excess of expenses, at the expense of the tax payer. And at a time when the uninsured are themselves paying about $30 billion in health care expenses, leaving the rest of their bills uncompensated and thus subsidized by insured patients. And at a time when 46 million Americans are uninsured, some not knowing where to turn if they fall ill or sustain a serious accident.
Hospitals continue to be the backbone of the healthcare delivery system. As the nation grows older and we live longer with multiple co-morbidities, the need for seamless integration of information and services to maximize efficiencies, lower the risks of errors, minimize duplication and waste, and optimize quality outcomes will depend on easy access by every community to a healthy acute care facility.
Getting the system back in balance, in proper proportions, and working for all Americans is a steep order. It's on the plate of President Obama's new administration and the current Congress. Let's pray they get it right.
Published On: March 20, 2009