PA Hospitals: Hospital Margins Continue to Decline as Recession, Budget Proposals Threaten Patient Access to Care

Harrisburg, Pennsylvania - Wednesday, July 29, 2009--Pennsylvania's general acute care hospitals continue to be seriously affected by the ongoing recession. New data compiled by The Hospital & Healthsystem Association of Pennsylvania (HAP) shows that hospitals' average total margins are at -3.59 percent for the period of July 2008 through March 2009, compared to +4.21 percent for the period of July 2007 through March 2008. The percentage of hospitals with a negative total margin increased from 31 percent to 55 percent over the same period.

"This 7.8-percentage-point drop is unprecedented," said HAP President and CEO Carolyn F. Scanlan. "The deteriorating financial health of Pennsylvania's hospitals could not be happening at a worse time, as state budget legislation under negotiation in Harrisburg proposes up to $280 million in combined state and federal payment cuts that will further weaken hospitals and jeopardize patient access to care.

"With more than half of Pennsylvania's hospitals experiencing ongoing negative total margins-up from one-third just a year ago-we are seeing an erosion of hospitals' ability to retain staff, invest in health care technology, and make capital improvements-severely affecting hospitals' core mission to provide care for patients 24 hours a day, seven days a week."

Budget proposals call for the elimination of, or drastically cut funding for, trauma centers and burn centers, medical and health professional education, outpatient/inpatient disproportionate share, obstetrical/neonatal services, and small and rural hospitals.

"Pennsylvania's hospitals recognize the difficulties of developing a state budget during these difficult economic times," Scanlan said. "But patient and community health care needs are increasing as the recession continues, and it is essential that all Pennsylvanians have continued access to critical hospital services, in good times and bad."

A Spring 2009 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 patients who are underinsured or uninsured. These trends match those reported in a number of national surveys, including one released by the American Hospital Association. ( Links: www.aha.org/aha/press-release/2009/090427-pr-economy.html and www.aha.org/aha/news-center/map/index.html and www.aha.org/aha/news-center/map/pennsylvania.html )

Recently, HAP estimated that the proposed budget cuts could result in potential job losses for thousands of individuals who are either directly employed by hospitals or through jobs in communities that are related to hospitals.

"Hospitals have already taken significant steps in response to the ongoing recession," Scanlan said. "Before the state budget cuts were proposed, half of all Pennsylvania hospitals were already facing challenges in meeting their day-to-day financial obligations; more than 8 of 10 hospitals had, or were considering, reducing staff; and 9 of 10 hospitals had reduced capital spending for building improvements, renovations, or new medical equipment."

"Pennsylvania's hospitals clearly have made every effort to reduce expenses during the recession," Scanlan said. "If any portion of the proposed cuts is enacted, access to timely hospital care will be jeopardized and thousands of Pennsylvanians could lose their jobs."

"The blue-and-white hospital ‘H' stands for Healing. Health. Hope. Hospitals exist to care for people 24 hours a day, seven days a week," Scanlan said. "We need to keep that promise."

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