Hospitals Continue to Feel Lingering Effects of the Economic Recession

January 19, 2011

Although the U.S. economy is beginning to show signs of recovery, hospitals continue to be adversely impacted by the lingering effects of the economic recession, according to new data from the American Hospital Association (AHA).  That's why the AHA is urging Congress to extend important Medicaid funding to ensure that the nation's most vulnerable patients continue to receive the health care that they need.

The AHA survey data also noted that patients continue to delay or forgo care as family budgets remain tight with 70 percent of hospitals reporting fewer patient visits and elective procedures.  Facing difficult financial challenges, more patients and families are enrolling in programs for low income populations, like Medicaid and Children's Health Insurance Program.  These programs traditionally do not cover the cost of hospital care, placing increasing financial strain on hospitals.  With states facing significant budget shortfalls, intense pressure has been placed on these programs.  Exacerbating this trend is that nearly nine in 10 hospitals reported an increase in care for which the hospital received no payment at all.  

Last year's economic stimulus bill provided a temporary increase in Medicaid matching funds, known as the Federal Medical Assistance Percentage (FMAP), but this additional funding is set to run out at the end of the year.  "Today's data demonstrates why it is essential Congress act now to extend FMAP," said Rick Pollack, executive vice president of the AHA.  "Without an immediate extension of FMAP, states may cut Medicaid funding that millions of our most vulnerable patients - children, the disabled and the poor elderly - depend upon."

Ensuring that hospitals have the tools and resources they need to care for those in the community is vital during such a difficult period economically for so many people.  The AHA survey also found that:

  • Nearly three-quarters of hospitals reported reduced operating margins.
  • Forty-four percent of hospitals reported a reduced access to capital.
  • Nearly a quarter of hospitals reported that their ability to access capital is worsening.
  • Sixty-seven percent of hospitals have not started or continued capital projects have been put on hold since the economic recession.

Hospitals faced with such financial realities are making significant changes in an effort to weather the economic storm.  Common options for hospitals have included cutting administrative costs, reducing staff and curtailing services.  In fact, 89 percent of hospitals indicated that they have not added back staff or increased staff hours and 98 percent have not restored services or programs previously cut due to the downturn in the economy.

"Some may be seeing glimmers of improvement in the economy, but many patients and families are still struggling and the hospitals who serve them are a reflection of this," said Pollack.  "Making sure that those most in need are cared for is of vital importance and why we are asking Congress to extend FMAP."

The report is based on AHA analysis survey data from 572 non-federal, short-term acute care hospitals collected in March and April 2010.  Click here  for a copy of the report; full survey results can be found at www.aha.org.

About AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the improvement of health in their communities. The AHA is the national advocate for its members, which includes more than 5,000 member hospitals, health systems and other health care organizations, and 38,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends.

         
 

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