Economic Disease Made U.S. Hospitals Sick

The financial crisis and the recession have not only made U.S. banking, retailing and manufacturing etc. face the music, but also the hospitals. More and more hospitals are in the red, and they have to cut down costs by reducing the staff, postponing construction projects and so on.

Hospitals in America employ about 5 million people in total, offering not only medical care but also employment opportunities. The U.S. press reported on the 27th that donations and investment returns are down, which make the hospitals’ capitals shrink. While people have not been going to hospitals once they got sick, reducing the number of patients. At the same time, patients are not selecting profitable diagnostic procedures and elective surgeries.

In the past few months, patients and insurers have been paying hospital bills more slowly, which made hospitals lack appropriate cash flow. The uncertainties of medical policies during the administration transition also results in the degradation of hospitals. In November, Moody’s Investors Service changed its 12- to 18-month outlook from “stable” to “negative” for hospitals, which reflects market-estimation for hospitals.

Actually many medical systems have been in a bind. In New Jersey, where 47 percent of hospitals posted losses in 2007, five hospitals have closed this year. In Hawaii, nearly every hospital is in trouble, with two filing for bankruptcy.

As for those remaining hospitals, they’ve been reducing nurses and pharmacists and other service personnel. Since October, there’s been “a dramatic slowdown” in plans for new wings and building upgrades, said Paul Keckley of the Deloitte Center for Health Solution.

“They’ll get swallowed up by somebody else if they need to exist, and if they don’t, they’ll just close,” said Tuck Crocker, vice president of the health care practice at the management consultant firm Bearing Point.