L: Not to worry, people will always get sick. The health-care industry was strong until recently, adding jobs as other industries cut back. Now, there's growing evidence that the hospital industry is not immune. Curt Nickisch reports from member station WBUR in Boston.
CURT NICKISCH: Steve Tringale runs a national health-care consulting firm in Boston. In his 30 years in the business, he's never seen anything like this.
M: The recession is clearly hitting hospitals harder this time than it has in the past. The factors which are driving the overall economic downturn have conspired in some ways to almost set up a perfect storm for hospitals.
NICKISCH: He says there are four main factors contributing to this storm. First, state budgets are tightening, so critical reimbursements to hospitals are shrinking. Second, as the economy weakens, people are losing their jobs and employer health insurance. Third, people are putting off medical care when they can.
M: It's been tough on the kids. I can't, you know, throw a ball to them anymore. I can't bend down and pick it up.
NICKISCH: Wally Glendye has a bad knee, and he's up for replacement surgery, but he says he can't afford the co-pays and deductible.
M: It's just the wrong time to spend money. I mean, it is. If it was better, absolutely, but it's not the time to play around, not at all, no, no.
NICKISCH: Karen Nelson with the Massachusetts Hospital Association says there's another reason people like Glendye are putting off medical care.
M: Because the economy is so lousy, patients are deferring elective procedures. They're afraid to leave their job to be out for two or three weeks and then to come back and find a pink slip.
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NICKISCH: It's not only elective procedures that are down. A recent survey from the American Hospital Association says two-thirds of hospitals are seeing lower patient admissions overall, and this is at a time when they were counting on an older population needing more care. At Tufts Medical Center in Boston, this is all made worse by the fourth and final factor in the storm: the credit crunch. It's harder to get money to build a new wing or buy better equipment. Tufts Medical Center's CEO, Ellen Zane, says the sliding stock market has also hit the hospital's endowment, which funds medical research.
D: When there are no gains, it's hard to support it, and it means that the clinical part of our enterprise has to, what I always say, is speed up the treadmill.
NICKISCH: That means asking employees to do more, even while Tufts cuts back on hiring. Zane has put expansion plans on hold. She's also urging doctors to cut back on travel for their medical research. Changes like these are becoming common at hospitals across the country. Some are even laying off workers, including the venerable Massachusetts General Hospital in Boston. Health care consultant Steve Tringale says medical campuses are going to come out of this recession in worse financial and physical shape.
M: Hospitals need, you know, new heating systems, new chillers; ORs need to be rehabbed; buildings need to be maintained - things like that.
NICKISCH: Tringale says he thinks most hospitals will find ways to save money without cutting quality of care.
M: You know, the longer this recession goes, the higher the risk that that starts to become an issue. I don't think it's there right now.
NICKISCH: Hospitals could get a helping hand from the incoming Obama administration. The president-elect's transition team says an economic stimulus package might include a boost to federal Medicaid dollars. That's giving hospitals some hope in what otherwise appears to be a weak, bleak 2009. For NPR News, I'm Curt Nickisch in Boston.