Hospitals reported an 8% increase in uncompensated care between the third quarters of 2007 and 2008.
The economic downturn in the U.S. has already had a negative impact on the hospital sector, and will continue to do so in 2009.

The American Hospital Association recently surveyed members, and found that the recession has negatively impacted hospitals in at least five ways:

– Declining admissions
– Falling elective surgery volumes
– Reduced patient payments and growing bad debt
– Declining investment income
– Dried-up capital.

For more details on the AHA survey, see my November Health Populi post, Hospitals Sickened by the Economy.

Health Populi’s Hot Points: Hospitals will respond to the downturn in myriad ways. Grady Memorial in Atlanta is proposing to increase costs to uninsured patients — further rationing access to a population with already-limited access. Grady argues that many of the patients who receive free care are abusing the system, according to the Atlanta Journal-Constitution.

In other states with substantial exposure to Medicaid, hospitals stand to lose a lot of money. In New York, for example, Governor Paterson is proposing to cut $3.5 billion from health care. The Hospital Association of New York State says that all but 20 of New York’s 200+ hospitals would suffer under Paterson’s proposal.

Then there will be a handful of high-performing hospitals will continue with expansion plans and capital projects. For example, in Cleveland, University Hospitals and the Cleveland Clinic will proceed with their respective growth plans. Both have bond issues and access to capital that very, very few providers enjoy at this time.

It’s these high-performing hospitals that could weather the recession rather well and emerge even stronger once the U.S. moves through the downturn. They will have new, renewed and strong programs that are resilient.

As for the less successful institutions, resilience will be a critical success factor. But crippling bad debt and declining top-lines will no doubt erode the very heart of too many American hospitals in 2009.