Many public hospitals face increasingly pressures; Nonprofit hospitals face uncertain futures

The Wall Street Journal: "Faced with mounting debt and looming costs from the new federal health-care law, many local governments are leaving the hospital business, shedding public facilities that can be the caregiver of last resort. … More than a fifth of the nation's 5,000 hospitals are owned by governments and many are drowning in debt caused by rising health-care costs, a spike in uninsured patients, cuts in Medicare and Medicaid and payments on construction bonds sold in fatter times. Because most public hospitals tend to be solo operations, they don't enjoy the economies of scale, or more generous insurance contracts, which bolster revenue at many larger nonprofit and for-profit systems. Local officials also predict an expensive future as new requirements — for technology, quality accounting and care coordination—start under the overhaul, which became law in March" (Sataline, 8/29).

The Orlando Sentinel/The Washington Post: "When Florida Hospital and United Healthcare started their public wrangling over a new contract this summer, each side pointed to the other company's profits. Both companies are health-care behemoths. Minnesota-based United Healthcare is the largest health insurer in the United States, with profits of $3.8 billion in 2009. Adventist Health System, which operates Florida Hospital system, is the largest nonprofit Protestant health-care provider in the nation, operating 37 hospitals in 12 states and generating $363 million in profit in 2009. But in the high-dollar world of health care, what does it mean to be a nonprofit hospital that makes big profits? … Today's nonprofit hospitals … are trying to juggle the demands of making money with being a charitable organization. … For legislators across the United States, there's growing tension over the fact that massive nonprofit-hospital organizations don't pay any taxes. For nonprofit hospitals, much of the community benefit is measured in two ways: through charity care and 'community-benefit programs,' which can range from health fairs to glaucoma screening" (Shrieves, 8/29).

The Boston Globe: "The stalwart of the state economy is struggling these days as expenses rise, patient visits decline, reimbursements shrink, and pressure to control health care costs intensifies. Over the past six months, according to state statistics, the health care sector has had no employment growth, a stunning development for an industry that has steadily added jobs through even the worst recessions. A slowing health care industry would have broad implications for the Massachusetts economy. Health care is the state's biggest employment sector, accounting for about one in six jobs, and has provided stability through downturns and support for recoveries. Just in the past few weeks, hospitals in Beverly, Leominster, and Pittsfield have said they will cut more than 200 jobs combined" (Gavin, 8/29).

---

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.