Hospital execs: Current economic crisis worse than previous one

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Nearly nine in 10 hospital executives believe the current economic crisis will impact their facilities more heavily than the downturn of 2001-2002, according to a survey released Tuesday by CSC, a healthcare market research and consulting firm.

The survey, “Treatment Plan: Hospitals Respond to the Economic Crisis,” said that the impact is already being felt, as 55 percent of hospitals have seen cuts in revenue from Medicaid payments and many are beginning to prepare for increases in uncompensated care.

With the economy weighing heavily, CSC found that 74 percent of hospitals surveyed have begun implementing changes to respond to the crisis, while 20 percent are in the planning stages of responding. Some of the changes have been made to capital investments: 60 percent report delaying or deferring future construction, 55 percent report delaying or deferring future IT projects and 38 percent have postponed IT expansions already underway.

“The economic environment, exacerbated by the credit crisis, has put the healthcare industry in uncharted waters,” said Deward Watts, president of CSC's global healthcare sector. “The industry's quick response to this challenge is encouraging, but tough times lie ahead. Hospitals that address changing patient demands and shifting reimbursement cycles will be better positioned to mitigate the downturn.”

The survey indicated that 15 percent of hospitals surveyed have accelerated IT projects in hopes that the effective use of information will help deal with new patient demands and changing reimbursement cycles while concurrently improving the quality of care.

At the same time, CSC reported that 75 percent claim that they will be cutting costs, while 59 percent will be taking the downturn as an opportunity to tighten up their revenue cycle management. Only 43 percent plan to lay off staff, 21 percent anticipate cutting services and fewer than 4 percent see the need to close facilities.

One of the largest factors expected to affect hospitals and health networks is the manner in which patients pursue care, according to the survey. Increased cost of living, tightening credit and the job market are creating a “perfect storm,” where the uninsured patient base rises and insured patients look for a greater “bang for their buck.”

Of the hospital executives surveyed, 67 percent expect to see an increase in emergency department visits, while 58 percent expect to see fewer routine checkups. Half of the executives interviewed expect to see fewer patients coming back for follow-up care.  

CSC conducted 54 interviews with hospital and health network executives during the latter half of November, with 94 percent at the C-level. Nearly 50 percent were chief executive officers, chief financial officers or chief operating officers.