Michigan Hospitals Face ‘Fiscal Crisis’ Because of Recession, Uncompensated Care Costs, Report Finds
The nationwide economic recession is pushing Michigan hospitals "to the brink of a fiscal crisis," according to a report released on Thursday by the Michigan Health and Hospital Association, the Detroit News reports. According to the report, state hospitals in the third-quarter of 2008 posted low and negative profit margins, in part because of losses from uncompensated care and the fall of the credit market (Rogers, Detroit News, 2/6). Hospitals incurred bad debt of a record $2 billion, the report found, while uncompensated care for the third quarter increased by 8% compared with the same period in 2007 (Anstett, Detroit Free Press, 2/6).
The report found that between 1999 and 2007, the number of state residents with private health coverage declined by 727,000, while the number of Medicaid beneficiaries grew to a record-high 1.6 million. Meanwhile, funding for hospitals that treat Medicaid beneficiaries declined by more than $850 million between 1996 and September 2008, the report found (Detroit News, 2/6).
For the third quarter, the average total earnings for hospitals dropped to negative 2.9%, or a loss compared with positive 2.2% for the same period a year earlier, according to the report (Detroit Free Press, 2/6). To help offset losses, hospitals are reducing staff and delaying construction on new buildings "at a time when Michigan hospitals are treating more patients than ever," according to the News.
Lori Latham, spokesperson for MHA, said that the report aims to draw the state Legislature's attention to the funding needs of hospitals. "The health care safety net is in dire straits unless there's a new infusion of money," Latham said (Detroit Free Press, 2/6). MHA President Spencer Johnson added that the developments of recent years are "forcing Michigan hospitals perilously near the edge of a financial cliff" (Detroit News, 2/6).
The report is available online (.pdf).
