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Economic Downturn Takes Toll on California Hospitals

New Report Shows 73 Percent Increase in Patients Unable to Pay Out-of-Pocket Costs, 33 Percent Rise in Uninsured Patients Visiting Hospital ERs

SACRAMENTO, Calif., Jan. 7 /PRNewswire-USNewswire/ -- The economic recession gripping the nation is having a dramatic impact on California's community hospitals, according to a newly released special report by the California Hospital Association (CHA).

The report, which is based on a survey conducted in November 2008 among hospital chief financial officers (CFOs), shows a 73 percent increase in consumers having difficulty paying their out-of-pocket health care costs, and a 33 percent increase in uninsured patients visiting the ER. Additionally, California hospitals are reporting a 30 percent decrease in volume for elective procedures - one of the few areas that provide hospitals an opportunity for revenue growth.

"As more people lose their jobs in this declining economy, they also are losing their job-based health insurance," said CHA's President and CEO C. Duane Dauner. "The growing number of uninsured patients, coupled with inadequate Medi-Cal payments and the ripple effects of the financial market crisis, is leading to a decline in the financial health of California's hospitals at the very time when demand for health care services is growing."

California already ranks 49th in the nation in the availability of hospital beds, with only 1.9 hospital beds per 1,000 population. And, the state comes in dead-last nationally when it comes to funding health care for Medicaid (Medi-Cal) patients. As a result of the declining economy and inadequate Medi-Cal payments, Californians may soon find their access to hospital care further diminished. According to the CHA survey, the majority of hospitals have already made cutbacks or anticipate having to make reductions in patient care services in the near future. Among the service lines at risk are cardiology and obstetrics programs, subacute and psychiatric units and skilled nursing beds. Staff layoffs and pay cuts also are being reported.

The freezing of the credit markets is proving to be another significant hurdle for many California hospitals. More than 25 percent of hospitals report the inability to access financing for construction, remodeling, equipment purchases or working capital, according to the CHA survey. This has resulted in 41 percent of hospitals halting construction projects or equipment purchases.

The ability of California hospitals to meet the state's seismic upgrade requirements also is in jeopardy because of the economic crisis, with 38 percent reporting that they will be unable to meet the 2013 and 2015 deadlines.

The faltering economy also is beginning to take its toll on the ability of hospitals to remain viable contributors to the state's financial structure. Almost 70 percent of hospitals report that the deterioration of investment holdings has had a moderate or significant impact on their overall financial condition, with a number of hospitals concerned about their ability to comply with bond covenants related to cash and liquidity measures.

"It's clear from the survey results that the economic challenges facing all Americans are also affecting the hospitals who provide care to us when we are sick or injured," Dauner said. "When our hospitals are at risk, we are all in danger."

A full copy of the special report, called "A Report on California Hospitals and the Economy," can be found on CHA's website -

CHA, based in Sacramento, is the statewide leader representing the interests of more than 450 hospitals and health systems in California.

SOURCE California Hospital Association
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