COST: Hospitals and the Economic Crash

There's a strain of conventional wisdom that the health sector is recession-proof but it's not so clear that it's true when a recession is this broad and deep. Many people who are losing their jobs also are losing their insurance, and there's ample data to remind us that the uninsured and the underinsured skimp on care, which in turn affects hospitals and other providers. Even the insured are watching their health care pennies. PBS's NewsHour, in the first of a three-part series this week, profiled a husband and wife paying $800 a month for a family health insurance policy but their out-of-pocket expenses were still so high (and his mortgage-industry income nicked because of the real estate crash) that they had to choose between treating her gall bladder problems or his lung infection.

The American Hospital Association, in a bid to secure hospitals a share of the upcoming stimulus package, started running ads noting that community hospitals directly employ more than 5 million people, and hospitals support a tenth of all US private sector jobs. In 2007 45 percent of all new private sector jobs were in health care. But income is down as patients delay getting care and the demand for uncompensated care rises. Many hospitals are feeling the pinch.

Health blogger Jane Sarasohn-Kahn, whose Healthpopuli blog often addresses hospital finances, writes that hospitals reported an 8 percent increase in uncompensated care between the third quarter of 2007 and third quarter of 2008. AHA says admissions are down, elective surgeries are down, investment income is down, access to capital has shrunk. The only thing that's up is unpaid bills and bad debt. These conditions, Sarasohn-Kahn says "will no doubt erode the very heart of too many American hospitals" this year.

The NewsHour interviewed a hospital exec in Nashville who made the same point:

BETTY ANN BOWSER: Everything costs more, including health care. Doctors here at the city's Baptist Hospital are seeing dramatic evidence of what happens when health care costs continue to rise in an economic downturn.

In the past few months, there's been a 40 percent increase in the number of patients who've cancelled appointments with the hospital's cardiology practice, many of whom are insured.

CEO Charlie Powell says these are people who have serious heart conditions.

CHARLIE POWELL, CEO, St. Thomas Heart Baptist Hospital: The longer you put off preventive care, the more likely you are to end up in the emergency room and come much closer to a situation where death could be the result of a serious cardiac condition.

BETTY ANN BOWSER: So these people are literally flirting with death?

CHARLIE POWELL: Absolutely. What we're now seeing is those people with insurance making these decisions, as well.

A glance at newspapers around the country (assuming that newspapers survive their own economic meltdown but don't get us started) shows some hospitals are already in crisis:

The Atlanta Journal-Constitution reports that Clayton County's only hospital will stay open and employees will keep their jobs after the county commission voted at the last minute to back a $40.2 million bond for Southern Regional Health System. That means the 331-bed hospital will not default on its loan.

The Philadelphia Inquirer reports that the Hospital and Healthsystem Association of Pennsylvania has released results of a December survey showing that tight credit, ailing stocks, and financially strapped patients are hurting the state's hospitals. Forty-two percent reported a moderate to significant effect on their day-to-day financial operations, and three-quarters are forecasting a moderate to significant effect on their financial stability this year.

The Tennesseean reported that credit crunch derailed the planned sale of and HCA hospital in Pensacola, Fla. The locally owned not-for-profit health care system that sought to buy West Florida Hospital couldn't secure financing.

And back in Atlanta, health advocates criticized beleaguered Grady Memorial Hospital for proposing to raise costs for some uninsured patients, saying hospital leaders were being insensitive to poor people who use Grady as their health center of last resort. Grady CEO Michael Young said the hospital wants "to make sure that people who can afford to pay something will pay something" but will not deny care to those in need.

So if hospitals are a strong sector, we'd hate to think about what's happening to the weak sectors. (Never mind, we already know.)