Urban Hospitals Face ‘Biggest Threat’ Amid Slowing Economy, Government Spending Cuts

While urban hospitals, "[l]ong the safety net for the working poor," provide free care for millions of Americans without health insurance, a slowing economy and higher unemployment rate has left many such hospitals "facing their biggest threat in years" -- a "growing" number of uninsured patients and "soaring" health care costs, the Chicago Tribune reports. In addition, President Bush has proposed "deep cuts" in programs that help urban hospitals "make up the difference," prompting hospital industry analysts to warn that "it's just a matter of time before the weakest hospitals fold" and that the "shakeout could be coming soon given the weak economy." During the 1990s, the expansion of managed care "squeezed" hospital revenue, while the 1997 Balanced Budget Act reduced federal spending on urban hospitals. Though COngress restored some of the funding in December, the Bush administration has also proposed this year to cut "all but $20 million" from the Community Access Program, currently a $140 million initiative that helps to "link" the uninsured to hospitals and other providers. Rick Wade, senior vice president of the American Hospital Association, said, "The workforce issues, rising numbers of uninsured and the cost of pharmaceuticals have all harmed hospitals to some degree, but they have hurt inner city hospitals the most."

Chicago Crisis
In Chicago, about 70% of the city's 27 hospitals that serve many uninsured and Medicaid patients reported losses on operations in 1998, according to an Illinois Hospital & HealthSystems Association analysis completed this month. The association also found that in the last 20 years, 22 Chicago hospitals have closed, including eight in the 1990s -- a fact the group mainly attributes to "inadequate" government reimbursement rates. "There is a danger that hospital closures will occur," Larry Singer, director for the Institute for Health Law at Loyola University Chicago School of Law, said. For example, one in three patients entering the emergency room at Chicago's Roseland Community Hospital last year lacked health insurance, and the number of uninsured patients and those "able to pay only a small part of their bills" treated by the hospital last year rose to 20%, up from 11.4% in 1995. In addition, while Roseland "got stuck with more of the bills," the hospital's revenue "barely budged, inching up" less than 1% a year to $59.4 million in 2000 from $57.3 million in 1995. The hospital also reported a $1.1 million loss on operations last year and will likely post similar losses this year. "The free health care that inner city hospitals give away really destroys the bottom line," Vince Bakeman, Roseland's board chair, said, adding, "These facilities are expected to continue to do this, yet there is no additional financial revenue source coming in. We're in a dangerous situation" (Jaspen, Chicago Tribune, 4/8).

'Sick' of Paying the Tab in Boston
Meanwhile, the Boston Herald reports that local hospital officials, "struggling" with "mounting" costs, "say they're sick of picking up the bulk of the nearly $400 million tab for providing free emergency care to those who can't afford it" and have urged "taxpayers to take on more of the burden." Ron Hollander, president of the Massachusetts Hospital Association, said, "We have a long and proud tradition of keeping our doors open to everyone. No one calls that core value into question. This is just a matter of how to share the responsibility." Boston hospitals receive reimbursements for providing free care through Massachusetts' uncompensated care pool -- which receives funding from hospitals, insurers and the state and federal governments -- but the pool will likely "fall nearly $70 million short of the total cost of reimbursable free care this year," a deficit that hospitals "must pick up." To combat the problem, hospital officials have lobbied state lawmakers for a "larger state contribution" to the pool and an "overhaul" of the system. "We recognize that the state has some very serious financial challenges," Matt Fishman, director of community benefits programs at Partners HealthCare System Inc., said, adding, "But we are concerned about the challenges that hospitals throughout the state are facing because of the very large financial commitment they are making to care for the uninsured at a time when (hospitals) are struggling financially." Massachusetts Gov. Paul Cellucci (R) has proposed that the state "cover the deficit" and pour an additional $100 million into the pool. According to Rep. Harriett Stanley (D), co-chair of the state Legislature's Health Care Committee, the uncompensated care pool "is under active discussion. The problem is, everyone comes at this with a very different viewpoint." She said that the pool "has troubles" and that she would "like to see a review of it," but added, "I personally am not willing to just put more money into a system that doesn't work well." In the state Senate, the pool has become "part of the intense deliberations" in the Ways and Means Committee, Chair Mark Montigny (D) said. However, Montigny said that he supports "targeted funding" rather than "broad-based relief" for hospitals. "We're looking at all sides because we're very concerned about health care," he said, adding, "Still, we have to realize that we're looking at a long term problem that's getting worse" (Powell, Boston Herald, 4/9).