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Hospitals hurting


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POSTED: Thursday, November 05, 2009

Hawaii's 16 hospitals lost $187 million on patient care last year — a drop from the previous year's $212 million — but losses are expected to mount, says Terri Fujii, managing partner at the Ernst and Young accounting firm.

In a preliminary report at an annual Healthcare Association of Hawaii membership meeting yesterday, Fujii said hospital losses likely will spike in 2010 as unemployed people run out of temporary COBRA insurance and more uninsured people go to emergency rooms.

About 12,100 more people lost jobs and insurance this year as of October, and about 93,400 people had no insurance coverage, according to her report.

“;A lot of changes are coming and they're not going to add to the system; they're going to take away,”; she said. “;We don't know exactly the impact, but it's negative.”;

Medicare payments to doctors will be cut 21 percent across the board Jan. 1 and changes are planned to Medicaid benefits. The effects of proposed health reform legislation are unknown.

The report draws a dismal picture of reduced payments, less access to capital and increased needs.

Ernst and Young analyzes the finances of the Healthcare Association of Hawaii's member facilities every year. The message has continued year after year: Revenue for patient care isn't covering costs.

Hospitals lack control over revenues and costs, with payments set by state and federal governments and salaries based on union agreements, the report notes. Minimum staffing levels are required; drugs, supplies and other patient care expenses are based on need; and unemployment insurance costs are increasing with high unemployment, Fujii reported.

The hospitals lost $114 million on Medicare services and $78 million for Medicaid/Quest services last year.

To help cover the Medicaid shortfall, the federal government last year gave the hospitals $13.3 million in so-called “;disproportionate share”; payments and $7.5 million of supplemental payments.

An additional $15 million in disproportionate share funds was allocated for Hawaii this year, but the governor has not released $12.2 million in matching state money, which Senate Health Chairman David Ige (D, Aiea-Pearl City) said “;is troubling from our perspective.”;

The federal money is still available, “;but the hospitals are hurting,”; Ige said. “;We would like to get it to them as soon as possible. We are fortunate the hospitals are taking people who are uninsured.”;

Charity care and bad debt (services for which partial or no payments were received) totaled $114.7 million so far this year, with $35.4 million for charity care and $79.3 million for bad debt. Last year, charity care was $24.6 million and bad debt $107.1 million, for a total of $131.7 million.

               

     

 

HAWAII'S HEALTH CARE INDUSTRY:

        » Is the fourth-largest private industry based on gross domestic product.
       

» Contributed $4.2 billion in health care and social assistance to Hawaii's GDP in 2008, and could come to represent a larger share of the state GDP with decreases in other industries.

       

» Employs about 9 percent of Hawaii's work force (44,337 people).

       

» Pays average wages (in 2007) of $41,703, compared with an average $37,436 in private industry.