What will get patients in the hospital if even the stork stops coming?


Everyone knows that patient volumes have been declining at hospitals large and small over the past few years. But common wisdom has said that patients were putting off elective and "not critical" procedures. For example, Health Management Associates (NYSE: HMA) experienced a slight decline in inpatient admissions for same-hospital continuing operations in second-quarter 2010 (2Q10), and the Naples, Fla.-based hospital chain has reduced its guidance of 1 to 2 percent annual same-hospital admissions growth down "closer to 1 percent," said CEO Gary Newsome during a recent conference call with analysts.

"The challenging economy and the speed with which it will recover remain our biggest unknown, and it is our belief that this uncertainty has affected patient volume in all aspects of healthcare as patients weigh time off from work and out-of-pocket expenses associated with physician and hospital visits against the acuity of their illnesses," he explained. "We believe that patient visits are being delayed as a result of these financial dilemmas. At some point in time, that will have to come back into the system."

But even the national birth rate appears to be going against hospitals. The Pew Research Center has found that birth rates started to decline in 2008 hand in hand with the onset of the recession, reports the Nashville Business Journal. Now two for-profit hospital chains have attributed at least part of their declining admissions to a drop in deliveries.

Same-facility admissions at Nashville, Tenn.-based HCA Inc. declined 0.3 percent in 2Q10 due to a 5.2 percent decrease in deliveries compared to 2Q09, reports the Nashville Business Journal. For the first six months of the year, deliveries have fallen by 4.1 percent, according to CEO Richard Bracken. "Our thinking regarding this reduced delivery volume is that, while some of this is related to market-share loss due to competitive factors, the significant majority of this reduction is related to a decreasing birthrate trend in the markets we serve," he told analysts during an earnings conference call.

At Dallas-based Tenet Healthcare (NYSE: THC), 2Q10 admissions declined 2 percent (0.6 percent adjusted). During a conference call with investors, CEO and President Trevor Fetter attributed almost 20 percent of the decrease in commercial admissions to the lack of babies being born, reports the Wall Street Journal.

Here's my question: It doesn't look like we can expect a new economic boom any time soon. So if even babies aren't bringing patients inside the hospital doors, what patient care and business models will hospitals have to adopt to stay financially viable? Cost cutting alone doesn't seem to be the answer. - Caralyn

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