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Originally published Wednesday, November 19, 2008 at 5:10 PM

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Report: Economy is sickening US hospitals

The dismal economy has American hospitals ailing, with new data showing declines in overall admissions and elective procedures, plus a significant jump in patients who can't pay for care, the American Hospital Association said Wednesday.

AP Business Writer

TRENTON, N.J. —

The dismal economy has American hospitals ailing, with new data showing declines in overall admissions and elective procedures, plus a significant jump in patients who can't pay for care, the American Hospital Association said Wednesday.

Hospitals also have been hurt by losses on their investments due to the turmoil on Wall Street, and many are finding it more expensive to borrow money - if they can at all, according to a report from the association, which represents about 5,000 U.S. hospitals.

"The worst part is the combination of all of the above," said Rich Umbdenstock, the association's president and chief executive.

Some of the hardest-hit hospitals began reducing staffing and services as early as last spring and more will follow, although hospitals are trying to limit the impact on patients, said Umbdenstock. He said hospitals are more likely to eliminate entire services - money-losers or ones with high operating costs - than to make across-the-board cuts that weaken all services.

"There have been hospital closures (this year), particularly in some of the more heavily impacted areas," such as New Jersey, where hospitals are providing more and more unreimbursed care, he said.

The downturn is hitting hospitals worse than other industries, he said, and many already were struggling due to pressures including government programs such as Medicare and Medicaid not paying the full cost of treatment. Hospitals are worried the Obama administration's health care reforms will affect reimbursement rates for those two huge programs, which cover 55 percent of all hospital patients.

A hospital association survey about conditions over the past three months drew responses from 736 hospitals, and the association report also uses figures from the July-September period collected from 557 hospitals that send quarterly reports to a central system run by the Colorado Hospital Association.

The Databank hospitals' investment results amounted to a combined loss of $832 million, compared with a $396 million gain a year earlier - a big problem because normally investment gains help make up for some of the costs not covered by patients and insurers.

Meanwhile, the interest those hospitals paid on borrowed funds jumped by 15 percent in the third quarter, compared to 2007's third quarter, another difficult squeeze because hospitals generally borrow money for expansions and upgrades, multimillion-dollar technology and even sometimes to cover payroll and pay regular vendors.

Other key findings:

-67 percent of hospitals saw some drop in elective procedures; 6 percent saw a significant drop.

-63 percent saw some decline in overall admissions; 9 percent saw a bigger drop.

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-Inpatient and outpatient surgeries and emergency department visits were all down roughly 1 percent in the third quarter.

-Half of hospitals have seen a moderate or significant jump in uncompensated care, with a jump averaging 8 percent. The association cites unemployed people losing their health insurance.

-Total profit margin at the Database hospitals dropped from an average 6.1 percent in 2007's third quarter to an average loss of 1.6 percent in 2008's third quarter.

-56 percent of hospitals are reconsidering or postponing renovations or expansions, and about 40 percent are delaying improvements to information technology or other equipment.

Copyright © 2008 The Seattle Times Company

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