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PA Hospitals: Economy Takes Toll on Hospitals and Patients

Total margins plummet to lowest levels in 15 years; Governor,General Assembly urged to restore Medicaid funding

The ongoing recession is taking its toll on Pennsylvania’s general acute care hospitals, as new data compiled by The Hospital & Healthsystem Association of Pennsylvania (HAP) shows that hospitals’ total margins plummeted to -6.3 percent for the time period of July 2008 through December 2008.

“Pennsylvania’s hospitals are not immune to the current economic recession,” said HAP President and CEO Carolyn F. Scanlan. “Unless Harrisburg policymakers restore the more than $75 million in combined state and federal Medicaid hospital funds that were cut from the Governor’s proposed 2009-2010 state budget, more hospitals will be forced to lay off staff and reduce or close services.”

“Hospital total margins have fallen off a cliff,” Scanlan said. “In just two years, we’ve seen an unprecedented 12-point drop in margins. These dramatic changes affect hospitals’ ability to retain staff, invest in health care technology, and make capital improvements. And cutbacks in any of these areas affects hospitals’ core mission to provide care for patients 24 hours a day, seven days a week.”

Scanlan said that the added burden of the recession puts hospitals into uncharted economic territory that will certainly affect communities and could leave more patients with fewer health care alternatives, particularly if the proposed Medicaid reductions in hospital payments are enacted.

“We are seeing dramatic differences in the way people are managing their health care needs right now,” Scanlan said. “A March HAP survey of Pennsylvania hospitals showed decreases in elective surgeries, increases in behavioral health visits and use of emergency departments, and increases in the number of Pennsylvanians who are underinsured or uninsured. These trends match those reported in a number of national surveys, including one released this week by the American Hospital Association.

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