Deepening economic troubles have exposed a few myths about the healthcare industry, while bringing to the fore the line many providers must straddle between functioning as a business and serving their communities.
A feature in this week’s HFMA “In the News” summarizes a New York Times article in which HFMA president and CEO Richard L. Clarke and Chairman-Elect Catherine A. Jacobson are cited on the effects of disappearing credit on hospitals. A significant point made in the article is that hospitals are subject to the same pressures as any other business in difficult economic times, belying “the stereotypical notion of health care as recession-proof.”
Just how vulnerable healthcare providers might be to recession was illustrated by another article in The Washington Post describing measures people across the country are taking to postpone medical care as budgets tighten. The article also refutes the notion of health care as a recession-proof industry. It notes that in past recessions, “healthcare spending briefly spiked--as people raced to doctors before their insurance ran out--and then fell sharply.” This time around, “even those who have coverage are feeling the pinch as employers shift higher deductibles and co-payments onto employees.”
Yet, as an article (subscription required) in The Wall Street Journal demonstrated, healthcare providers are still subject to criticism for making decisions that make good business sense if a community might suffer as a result. That’s because, the article asserts, “nonprofit hospital systems aren’t ordinary businesses. They’re required to provide benefits to their communities, such as free care for the indigent, in exchange for the billions of dollars in annual tax exemptions they receive.”
Business decisions such as the one that came under fire in The Wall Street Journal--closing a hospital in the economically distressed city of Detroit that was losing a reported $16 million annually--may become more frequent if the economy continues to worsen. In a message posted on HFMA’s special economic crisis resources page, Richard Clarke notes that such decisions “must be tempered with the realities of capital access and effective service delivery, but they also must be focused on what best serves community needs.” This is the difficult balance that all providers engaged in the “business of caring” must try to maintain.
Next Thursday (October 23, 2008), HFMA leaders will be offering a special audio webcast, provided exclusively to HFMA members as a free benefit, on the implications of the economic crisis for healthcare finance. To register, click here.
