As the economy worsens, fewer patients are seeking inpatient, surgical and emergency hospital care and more patients are unable to pay for the care they do receive. As a result, hospitals are being challenged to meet communities' health needs, which was reflective in weak fourth quarter results, according to report from the American Hospital Association (AHA).

The AHA compared DataBank data from the fourth quarter of 2008 against data for the same period in 2007. According to the results, hospitals are seeing fewer patients overall in many services, a potential indication that individuals are putting off care as family budgets become tighter and/or healthcare coverage is less generous or lost altogether.

The data also showed an increase of 6.6 percent in the cost of care for which no payment was received, demonstrating hospitals' role as the safety net for their communities.

Gains on investments traditionally have helped hospitals subsidize losses from patient care, particularly from Medicare and Medicaid, which cover more than half of patients served but pay substantially less than the cost of caring for patients, according to the AHA. Based on the fourth quarter survey results, the association said that the sharp decline in the value of stock and other investments has turned the gains to losses and hospitals have seen their reserves depleted.

The loss of reserves and higher interest expenses are making it harder to fund the capital projects needed to ensure hospital facilities and equipment can continue to meet the growing and changing needs of communities and keep pace with advances in medicine, AHA said. The cost of borrowing jumped 12 percent for the fourth quarter of 2008 compared with the same period in 2007, according to DataBank.

More than half of reporting hospitals were in the red in the fourth quarter of 2008--raising concerns about the impact on hospital services and jobs as they struggle to make ends meet, according to the report.

The AHA said that the effects of the economic downturn, the subsequent rise in unemployment and the loss of job-based health insurance have "impacted hospitals like never before. Patients count on their local hospital in times of need and hospitals' ability to care for their communities is compromised as turmoil in the economy and capital markets continues."