Aug. 04--Local hospitals have been hit by a double blow.
They are seeing dips in the number of people seeking the most profitable types of care. Meanwhile, when hospitals do take in more patients for overnight visits, a growing number can't pay their bills.
These two trends, which are unfolding at hospitals across the country, are among the forces behind Vancouver-based Southwest Washington Medical Center's two-year cost-cutting effort, and Legacy Salmon Creek's parent company's decision to freeze hiring in 2009.
Fueling both trends is a high unemployment rate that has left even those who remain employed concerned about spending decisions, experts say. The jobless, often either under-insured or with no insurance, are unable to pay their bills. Meanwhile, deductibles are climbing for those who remain employed, and many are choosing to put off doctor visits to save money.
Area hospitals' cost-cutting measures reflect economic forces beyond their control, said Cassie Sauer, spokeswoman for the Washington State Hospital Association, the nonprofit trade association for hospitals in the state.
"What you need is a high volume of people who have good insurance, and that's a pretty rare thing because so many people have lost insurance coverage or their insurance has these huge deductibles," Sauer said.
Fewer visits
In fact, 70 percent of hospitals nationwide reported lower overall patient volumes, according to survey data collected in March and April by the American Hospital Association. Patient volumes refer to both the number of people who are hospitalized overnight, or inpatients, and the number who seek outpatient care, such as doctor checkups and minor surgery.
"Equally alarming," the survey found, "nearly nine in 10 hospitals reported an increase in care for which the hospital received no payment at all."
Southwest Washington Medical Center's overall patient volumes are also down, including in key areas such as births, emergency room visits, and both inpatient and outpatient surgeries, according to hospital spokesman Ken Cole.
While Southwest's inpatient admissions are up overall, more of those patients are unable to pay their bills.
The hospital eats the cost when low-income residents are unable to pay their bills, calling this charity care. Those costs went from $26.3 million in 2008 to $39.9 million in 2009 -- a 52 percent increase. The hospital labels as "bad debt" the cost of serving those who are unwilling to pay. Those costs rose from $29.6 million in 2008 to $35.3 million in 2009 -- a 19 percent increase.
Vancouver-based Legacy Salmon Creek Medical Center is incurring similar costs. Brian Willoughby, spokesman for Legacy Salmon Creek, said the hospital increased charity care spending by 21 percent in its most recent fiscal year. He said patient volumes are fluctuating, with upticks in certain outpatient volumes and with inpatient admissions decreasing roughly 4 percent this past quarter.
"It's sort of a mixed bag," Willoughby said.
The biggest problem is an increase in uncompensated care, he said.
The hospital's parent, nonprofit Legacy Health System, froze hiring and cut expenses in 2009. It blamed its system-wide financial troubles on uncompensated care and losses in its investment portfolio.
Blaming the same forces, Southwest Washington Medical Center has been reducing expenses since 2008, cutting roughly $50 million through such measures as renegotiating contracts with vendors of equipment and supplies, cutting nurses' hours when patient volumes drop, reducing wages and initiating early retirements.
As part of this year's efforts to cut $32 million from its $462 million budget, Southwest, which employs some 3,400 full-time and part-time employees, laid off 30 people in June and July. This year's cuts will bring three-year spending reductions to about $82 million by the end of 2010.
Sauer, the state hospital association spokeswoman, said the mission of Southwest and other nonprofit hospitals is to care for patients first and then seek compensation. With rampant joblessness, they "have no way to recoup the money."
More challenges are on the horizon, including implementation of national health care reform, with millions more Americans set to receive insurance cards in 2014. That could mean higher volumes of insured patients -- and more revenue -- for Southwest and other hospitals. But that's not a certainty, said Rainy Atkins, chief operating officer for Southwest. For now, she said, "we've got to figure out how to deliver higher patient quality but at a lower cost."
Atkins said the new health care law, passed by Congress and signed by President Obama in March, will "offset a bit people who can't pay at all" by adding people to the insurance pool. However, she said, "there will be more people who fall into the 'government-sponsored payer' category," including those who receive insurance through the federal Medicare and Medicaid programs. Those programs pay significantly less than the cost of caring for patients.
What gives Atkins hope are the longer-term preventive measures contained in the health reform law. Among other things, the law aims to catch diseases early and ultimately control costs by expanding access to preventive care. The "preventive side," Atkins said, is "one of the keys to reducing our costs."
For now, hospitals are expected to continue to clamp down on expenses. Southwest's next steps are to conduct a comprehensive financial review of programs that serve the community but that don't necessarily pay for themselves. Hospital officials hope the economy improves. "If things can pick up and people get jobs again and people are feeling more comfortable, then we'll be better positioned," said Cole, Southwest's spokesman. "We really are just reflecting our community right now with everything that has gone on in terms of job losses and layoffs."
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