Dire Warning for Hospitals

Michigan’s hospitals are on the “brink of fiscal crisis,” a new report by the Michigan Health and Hospital Association says.

The state’s 144 hospitals that are part of the association are enduring the worst economic conditions since the 1930s, stemming from rising Medicaid caseloads, uncompensated care, and uninsured patients, according to the report, “Michigan’s Health Care Safety Net: In Jeopardy.”

The financial problems have prompted most hospitals to postpone or cancel capital projects, the MHA said, noting that the majority of Michigan hospitals were built in the 1940s and 1950s and are in dire need of improvements or replacement facilities.

“The state and national recessions, the credit market collapse, and a growing number of patients unable to pay for their health care are forcing Michigan hospitals perilously near the edge of a financial cliff,” MHA president Spencer Johnson said in a statement. “The recent economic downturn has collided with years of underfunding from the state Medicaid program. As a result, Michigan hospitals are now in financial peril, and the fallout will be painful and human if their health care safety net collapses.”

The average total margin for Michigan hospitals in the third quarter of 2008 was negative 2.9%, according to the report. Uncompensated care rose to $879 million in 2008, an 8% increase from 2007.

To counter revenue declines and rising costs, the MHA said many hospitals are starting to lay off workers in large numbers for the first time in recent history. Hospitals are also cutting services and programs and postponing or calling off capital projects.

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