Hospitals Rocked by the Recession

July 8th, 2009 by Reed Allmand

According to an article in the Star-Telegram, the healthcare industry is facing hard times as the recession creates massive losses across the board.

The article said:

“Consider Texas Health Resources, the top hospital provider in the region. From 2004 to 2008, the Arlington nonprofit system earned almost $1 billion in “excess revenue” — what regular companies would call net profit. Then the recession hit last year, and THR, with 13 local hospitals, lost nearly $428 million. That jaw-dropping turnaround is the first loss since the system was formed in 1997 by the merger of Harris Methodist in Tarrant County and Presbyterian Healthcare in Dallas.”

What’s happening is that many hospitals are being inundated with patients who no have health insurance. Many of these patients have suffered a job loss and other financial difficulties and simply can’t afford to pay their bills. Even if hospitals attempt to collect using traditional collection methods such as lawsuits and bank account seizures, many patients don’t have any assets and may file bankruptcy if the collection pressure becomes too great. This basically leaves many hospitals stuck paying the bill. But with loses such as the one sighted above it’s just a matter of when not if at least some of these hospitals will be forced into bankruptcy.

To avoid bankruptcy, Texas Health Resources has cut capital spending by nearly $35 million and has laid off fewer than 100 employees, hoping to trim expenses without compromising patient care. But there are only so many job losses and spending cuts a hospital can afford to take without endangering the health of patients. And because the number of uninsured patients seeking treatment is set to rise as the economy worsens, it will be a challenge for hospitals nationwide to avoid bankruptcy AND stop their financial losses.