Another Health Care Cost: Two Ways Hospitals Are Losing Money

Intensive care bed after a trauma intervention...
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A friend of mine works for a major New York City hospital, very close to someone in a very senior role. In this position, this person (whose gender I’m keeping deliberately vague) has a clear view of  some issues in the healthcare debate most of us don’t. I hadn’t seen this person in a while and asked how work was going — after all, every news report suggests that healthcare and education are booming, even in the recession, unable to find and hire all the help they need. If anyone’s job is safe and secure, this person’s must be.

Not true, they said. This year is OK, they told me, but next year might not be. As the recession drags on, this major, well-known and respected hospital is losing patients who are losing their jobs — and with them — their health insurance. The dominoes are falling in so many directions it’s hard to keep track.

As more Americans lose their jobs this hospital is losing patients, i.e. income. Without sufficient income, the hospital will likely have to cut services or staff. So this friend of mine might lose their job, too.

When patients don’t have insurance, they can go to an emergency room for care and get whatever the hospital decides it can afford to supply them. So, in two ways, the recession is draining income from hospitals: the formerly insured who can’t afford optimal care and the uninsured or indigent who take whatever they can get, a growing tab that hospitals legally must pick up. They’re getting hammered financially from two directions.

What strikes me about the healthcare “debate” is how little we still understand the minutiae, and how eager some stakeholders are that we do not. Those of us outside the system — and there are so many players, many with competing interests inside the system — can’t even ask all the tough, smart, informed questions because most of us, however intelligent or educated, don’t even know what to ask. There is a real sense of urgency to get to answers, now, as President Obama has said there will be a new healthcare plan by the end of this year, only 5.5 months away.

And how much do you even understand, or trust, the answers we’re being given?

2 thoughts on “Another Health Care Cost: Two Ways Hospitals Are Losing Money

  1. Caitlin-
    I have to say that I have some questions about this.
    Before the recession hit, New York City’s unemployment was running at about 5.7% Currently it is at 9% and I think it is reasonable to expect that it will go higher over the next twelve months before it begins to improves. Let’s say it reaches 11%. That would put the unemployment levels about 5% higher than before this all began.

    It would thus be reasonable to suggest that there would be 5% or so more people in NYC without health insurance although I suspect this number is high given the disproportionate number of patients likely to be covered by Medicare.

    I can absolutely see how this additional five percent will put added pressure on emergency room services that must be provided at the risk of the hospital and, yes, that will most certainly cost the hospitals money.

    However, over the past few years, NYC hospitals have suffered from serious overcrowding. I experienced this myself last year when my appendix burst on a flight between LA and NYC. I spent 28 hours in the emergency room before a bed could be found for me in the hospital- and even then it was only because I had some connections. And this was at New York Presbyterian.

    When you factor in that a large percentage of hospital patients are Medicare recipients, the facts would indicate that it is highly unlikely that the NYC hospitals are going to suffer from having too many unfilled beds. And these are not beds that are given, in most cases, to the uninsured.

    Additionally, you might find it worthwhile to do a little research into how much money the hospital you are referring to – along with other NYC hospitals- have in the bank. Most of the hospitals are non-profits, which means they pay absolutely no taxes. In recent years, hospitals have becomes incredibly adept at making money as their boards are now more often run by high net worth business people rather than physicians and community participants. Indeed, there are non-profit hospitals in this country with literally billions of dollars in the bank while often giving back remarkably small amounts to the community in the way of services to those who cannot afford to pay.

    While there are certainly hospitals in NYC – and other places – that suffer financially as they attempt to do good work, if the hospital you reference is a “major” hospital, you might want to learn more about their finances. You may discover that there is substantially less reason for concern than you may think.

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