U.S. hospitals reeling from economic crisis

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Hospitals are suffering from the economic downturn and are enacting drastic changes to respond to today's tough economy, according to a recent report from healthcare contracting services firm Novation.

Novation's first National Economic Impact Survey, a study of the members of VHA, University HealthSystem Consortium (UHC) and Provista, focused on the economic trends that are expected to impact hospitals over the remainder of 2009.

Approximately 60 percent of responding hospitals have seen an impact from the recent economic crisis, and nearly 47 percent foresee staff cuts in the near future, the report revealed.

Recent reports from the American Hospital Association and the Healthcare Financial Management Association confirm that the economic climate has caused serious problems for hospitals across the nation.

Hospital margins are decreasing as a result of reduced patient volumes, increased bad debt and charity care. Many hospitals are reducing their capital spending, which affects physician recruitment and, ultimately, negatively impacts profits, according to Jody Hatcher, president and CEO of Novation.

Additional highlights from the study include:

  • 73 percent of respondents have seen an increase in the cost of care related to meeting new patient safety standards;
  • 84 percent of respondents plan on reducing spending, with 49 percent anticipating a 6 to 10 percent reduction;
  • 44 percent of facilities will focus on product utilization to reduce costs;
  • 44 percent of respondents have seen a reduction in surgical procedures, with hip (orthopedic) procedures garnering the highest percentage drop at 45 percent; and
  • 69 percent of respondents will cancel or delay capital equipment projects.