Atlanta Journal-Constitution Examines Effect of Downturn on Health Care Providers

The recent economic downturn has left many health care providers "fighting to stay out of the red," but they have not passed their higher costs to consumers, the Atlanta Journal-Constitution reports. Ken Thorpe, a professor of health policy at Emory University, said that providers have not passed their higher costs to consumers because salaries and other contracts are negotiated at certain intervals during the year. Paul Fronstin, director of health research at the Employee Benefit Research Institute, said, "Providers have contracts with health plans," adding, "To the degree they can raise prices, they will, but they still have to be competitive."

In addition, some providers have not passed their higher costs to consumers because of concerns about a decrease in demand for services, according to Erik Chiprich, vice president of equity research for BMO Capital Markets. Thorpe said, "In times like this, people are less likely to fill prescriptions or go to their primary care physician for preventive maintenance."

However, University of Georgia economist Jeffery Humphreys said that providers at some point will have to pass their higher costs to consumers because of labor expenses and shortages of health care professionals. Phil Miller, spokesperson for the health care staffing company AMN Healthcare, said that health insurers also "will be hurt because there will be fewer employees to cover as unemployment rises" and because employers will seek to reduce their health insurance costs. He added, "Also, recession is bad for your health, so insurance companies will be paying more for benefits because it raises stress, and stress levels exacerbate everything" (Hendrick, Atlanta Journal-Constitution, 7/6).