Hospitals Preparing Triage for Budgets

Stroke victim Colton Peek Jr. works with physical therapist Kathy Brady at the Washington Rehabilitation Hospital, which has a $1 million deficit. The hospital has put off buying equipment, and staff have given up vacation days.
Stroke victim Colton Peek Jr. works with physical therapist Kathy Brady at the Washington Rehabilitation Hospital, which has a $1 million deficit. The hospital has put off buying equipment, and staff have given up vacation days. (By Kevin Clark -- The Washington Post)
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By V. Dion Haynes
Washington Post Staff Writer
Thursday, June 25, 2009

Washington-area hospitals, already battered by the recession, are bracing for what could be a budget crisis in coming months resulting from funding cutbacks by Virginia and Maryland.

Hospitals throughout the region are experiencing soaring demand from uninsured patients who cannot pay for their care and plummeting revenue from reductions in investment income, charitable giving and elective surgery.

So far, both nonprofit and for-profit hospitals have coped by freezing salaries and putting off construction projects and equipment purchases. But some experts predict that it could get much worse in the next fiscal year, with layoffs and reductions in services and programs, when Maryland and Virginia cut tens of millions of dollars from hospitals' funding.

The cutbacks are occurring as discussion grows about efforts by the Obama administration to extend health care to more uninsured Americans, a proposal that would be financed in part by reducing the government's reimbursement to hospitals for such patients by hundreds of billions of dollars.

If the economy doesn't improve, there could be "ugly scenarios that would require wrenching changes and scaling back of services," said Chris Bailey, senior vice president of the Virginia Hospital and Healthcare Association, adding that some facilities may have to make such tough choices as whether to continue operating the emergency department or obstetrics.

"There will be a lot of hospitals that won't survive," he said. "Already a number of them are operating on thin margins."

Across the country, the number of uninsured people has risen to 51 million from 47 million since the economy began sputtering in late 2007, and hospitals are reeling.

In April, the District significantly increased reimbursement for doctors with Medicare patients. For instance, rates for primary care visits more than doubled, from $46.46 to $101.56, city officials said. Still, investment losses and reduced federal reimbursement for elderly patients contributed to a $1 million deficit at National Rehabilitation Hospital, officials said. To plug the gap, about one-third of the full-time staff at the nonprofit hospital in Northwest Washington volunteered to relinquish up to three vacation days and the administration put off plans to buy therapy tables with lifts and other equipment for stroke victims.

At Reston Hospital Center, bad debt increased from $6.7 million in 2007 to $14.35 million in 2008, spokeswoman Joanna Fazio said. To cut costs, Fazio said, the for-profit hospital laid off a few workers, eliminated some more through attrition and delayed hiring of some non-clinical staff.

At the nonprofit Doctors Community Hospital in Lanham, decreasing values of its investments in part spurred fourth-quarter total profit to plunge 76.2 percent, or $31.5 million, from 2007 to 2008, according to the Maryland Hospital Association.

Funds for hospitals in Maryland and Virginia are expected to get much tighter in the next fiscal year, which begins in July.

Virginia's 100 hospitals are expected to lose up to $55 million after the legislature eliminated funds that reimburse hospitals for patients without insurance and froze reimbursement rates for Medicaid patients.


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