A new report is providing a “check-up” on the financial state of the commonwealth’s hospitals - and the diagnosis is not looking promising.
The Financial Analysis 2013: General Acute Care Hospitals, a report written by the Pennsylvania Health Care Cost Containment Council (PHC4), shows that the commonwealth’s hospitals are being under-funded by Medicare and Medicaid.
“Pennsylvania hospitals are absorbing a billion dollars every year in reductions for what they receive for Medicare,” Andy Carter, President and CEO of the Hospital and Health System Association of Pennsylvania, said. “We also know that Medicaid only pays about 81 cents on the dollar of cost so that’s a stress point.”
Carter said a sicker population is also contributing to the financial instability of hospitals.
According to the report, a third of the hospitals had negative operating margins in 2013 as revenues fell bellow expenses for patient care and other necessary operations.
Half of all Pennsylvania hospitals had total margins below the four percent threshold considered the minimum that is need for long-term financial stability.
“Roughly half of our hospitals statewide are precarious and we have to be mindful of taking responsible steps to ensure their long-term financial stability,” Carter said. “But closures and additional job losses are not imminent, but they are a possibility in the coming months and years.”
The report showed that nearly 4,000 hospital jobs were cut last year.
According to the Hospital and Health System Association, hospitals support one in ten jobs in the commonwealth and contribute almost $104 billion to the state economy.
But Carter said in 2013, Pennsylvania hospital’s uncompensated care - such as charity care and unpaid patient bills - totaled more than $1 billion.
This is a five percent increase from 2012 and a 35 percent increase over the last five years.
Because hospitals are struggling financially, they are relying on unsteady sources of funding such as the stock market and philanthropy.
However, Carter said this could be solved if the Centers for Medicare and Medicaid Services approved the Governor’s Healthy PA plan, which would use Medicaid money to provide subsidies for people to buy their own insurance.
“We don’t want more hospitals to close,” Carter said. “We don’t want them to resort to more layoffs, because if either of those things continue to happen over time, wait times for care and access to the modern healthcare service is going to be impeded.”