The residents of southern Louisiana have all faced difficult times in the almost three years since Hurricane Katrina devastated the region. No individual, business, or community in the metropolitan New Orleans region was unscathed. Natural disasters can, and do, strike anywhere, anytime. We only have to follow the Mississippi River north to Iowa to see the devastation of floodwaters to other communities.
I recently spoke with Ted Townsend, the CEO of St. Luke’s Hospital in Cedar Rapids, Iowa, about what their hospital could expect to face after this catastrophe. It was a sobering experience for me to advise a colleague that his institution may face a long term financial crisis similar to the one that the Federal government has not dealt with in the almost three years since Hurricane Katrina decimated the healthcare delivery system in our region.
I told Ted that in the aftermath of Hurricane Katrina, many hospitals and facilities did not reopen, leaving the healthcare delivery system in the Orleans, Jefferson, St. Bernard and Plaquemines parish area in a very fragile state. Five area hospitals – East Jefferson General Hospital, Ochsner Health Systems, Touro Infirmary, Tulane Medical Center, and West Jefferson Medical Center - stepped in and took responsibility to provide care to patients in the area, and continue to provide more than 90 percent of all hospital-based care. This Iowa CEO asked how we could afford to take on that tall order.
I then explained that the five hospitals’ losses for 2007 are estimated at $135 million, with combined losses expected to reach $405 million by the end of 2009. These losses are due to ballooning expenses in excess of revenues and reimbursements. Labor expenses have increased by $140 million, and non-labor expenses, like supplies, utilities, insurance, interest and bad debt, have increased by $300 million. Additionally, the hospitals face a debilitating shortage in health care professionals in the area. Unfortunately, based on the similarities of our situations, Ted’s hospital and community appear to face the very same problems in the near future.A supplemental appropriations bill with Katrina-related funding passed out of the U.S. Congress and onto the President’s desk last month. Unfortunately, much-needed financial support that was considered for five hospitals in the greater New Orleans area was not included.
Without sufficient and immediate aid, patients in the New Orleans area may face reduction, or possibly elimination, of hospital services. Some facilities have already been forced to reduce beds and eliminate services, such as pediatric and senior services. Others face reduction or elimination of the most expensive services, including mental health services, emergency room services and ambulance delivery.
This potential reduction in services will have a domino effect on entire communities and the recovery effort. As people choose to leave or to not locate in the area because of a lack of care, churches, and schools, the tourism industry, local businesses and the housing market will suffer.