Hospitals and the Economy Anne McLeod Vice President, Finance Policy California Hospital Association
Hospitals and the Economy “ American hospitals are financiall financially challenged and the challenged and the trends in revenues and expenses will put and even greater burden on the viability of many hospitals y y p and their ability to fund capital projects ” projects 2
Hospitals and the Economy 8.0% Unemployment Rate (Non-farm), 2007-2008 7.0% nemployment 6.0% 5 0% 5.0% % Un 4.0% 3.0% Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- 07 07 07 07 07 07 07 07 07 07 07 07 08 08 08 08 08 08 08 08 08 08 08 08 Source: Department of Labor, Bureau of Labor Statistics, Labor Force Statistics. (2008). Access at: http://www.bls.gov/oco/cg/cgs035.htm. 3
4 9 0 n u J 9 0 Hospitals and the Economy y a M M United States 9 0 r p A A 9 0 r a M M Unemployment Rates - Seasonally Adjusted 9 0 b e F California 9 i 0 n a J C lif 8 0 c e D D 8 0 v o N N 8 0 t c O 8 0 p e S 8 0 g u A A 8 0 l u J 8 0 n u J 8 0 y a M M 8 0 r p A A 8 0 r a M M 8 0 b e F 8 0 n a J 12.0% 10.0% 8.0% 6.0% 4.0%
Hospitals and the Economy Percent of Population with Employer-sponsored Insurance (ESI) and Medicaid ESI Medicaid 64% 14% icaid 13% 63% SI ation with ES on with Medi 12% 62% 11% 61% 10% % of Popula of Populatio 60% 9% 59% 8% 58% 7% 7% % o 57% 6% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Current Population Survey, U.S. Census Bureau. (2008). Access at: http://www.bls.gov/oco/cg/cgs035.htm; and Fronstin, P. (November 2005). Sources of Health Insurance Characteristics of the Uninsured: Analysis of the March 2005 Current Population Survey. EBRI Issue Brief , No. 287. 5
Hospitals and the Economy States with Budget Gaps in FY 2009 or Projected for FY 2010 States with Budget Gaps in FY 2009 or Projected for FY 2010 No Budget Gap FY09 and/or FY10 Budget Gap 09 a d/o 0 udget Gap Source: McNichol, E., and Lav, I.J. (23 December 2008). State Budget Troubles Worsen. Washington, DC: Center on Budget Policy and Priorities. 6
Hospitals and the Economy Percent of State Spending by Function Percent of State Spending by Function Total Spending $1.46 Trillion All Other, 40% Medicaid, 21% Transportation, 8% Elementary & Secondary Higher Education, Education, 21% 10% Source: National Governors Association and National Association of State Budget Officers. (June 2008). The Fiscal Survey of States. Washington, DC. 7
Hospitals and the Economy Percent of Gross Revenue by Payer y y Medicaid, 14.8% Other Government, 1.5% Private, 42.7% Medicare, 41.0% Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2007, for community hospitals. 8
Hospitals and the Economy Hospital Payment Shortfall (Nationwide) Relative to Costs for Medicare and Medicaid 1997 – 2007 Relative to Costs for Medicare and Medicaid, 1997 2007 Medicare Medicaid $5 $0 $0 -$5 -$10 ions -$15 $15 Bill -$20 -$25 -$30 $30 -$35 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2007, 9 for community hospitals.
Hospitals and the Economy Hospital Payment Shortfall (California) Relative to Costs for Medicare and Medicaid 1999 – 2009 Relative to Costs for Medicare and Medicaid, 1999 2009 Hospital Unfunded Cost of Providing Services Medicare and Medi-Cal Patients 1999 - 2008 $Billions Medicare Medi-Cal $0 -$1.0 $1 0 -$2.0 -$3.0 -$4 0 $4.0 -$5.0 -$6.0 -$7.0 -$8.0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 Year 10
Hospitals and the Economy Percent of Hospitals Reporting Impact of Economic Crisis Percent of Hospitals Reporting Impact of Economic Crisis Decrease in patient admissions 51percent Decrease in elective procedures 58 percent Increase in bad debt and charity care 60 percent Increase in uninsured visits to the ER 57 percent Decrease in total margin 50 percent Significant decrease in total margin 26 percent 11
Hospitals and the Economy Hospitals Play an Important Role in the California Economy Hospitals Play an Important Role in the California Economy Impact on Wages Impact on Wages $30 billion $30 billion Direct Effect Direct Effect and Salaries $29 billion Ripple Effect $59 billion Total Contribution Imapct on Imapct on $57 billion $57 billion the Economy $89 billion $146 billion Hospital Jobs Hospital Jobs 470,001 470,001 Effect on Statewide 582,613 Number of Total Jobs 1,052,614 12
Hospitals and the Economy 64% California Hospitals cannot secure capital 37% to fund seismic mandate California ranks Report a 49th 49th Negative Margin ________________ in hospital bed availability f for Californians C lif i 13
Hospitals and the Economy P Percent of Hospitals Reducing Expenditures on Capital Projects because of the t f H it l R d i E dit C it l P j t b f th Capital Crisis Beginning Early in 2008 77% Reduced Capital Spending* Scaled Back Projects Planned or 46% Already in Process Already in Process Decided to Not Move Forward with 54% Planned Projects not yet Started Stopped Projects that were Already 14% in Process Source: AHA. (March 2009). Rapid Response Survey, The Economic Crisis: Ongoing Monitoring of Impact on Hospitals. *Includes any hospital reporting that it had scaled back, decided not to move forward with or stopped projects planned or already in process. 14
Hospitals and the Economy Percent of Hospitals Reporting a Change in Capital Plans since Capital Crisis Began in Early 2008 C i i B i E l 2008 Stopped Projects Already in Process Scaled Back Projects Already in Process D Decided Not to Move Forward with Projects Planned id d N t t M F d ith P j t Pl d 40% % 34% 32% 28% 27% 25% 25% 8% 8% 6% 6% 6% New Capacity/Renovations p y Clinical Technology gy Information Technology gy Source: AHA. (March 2009). Rapid Response Survey, The Economic Crisis: Ongoing Monitoring of Impact on Hospitals. 15
Hospitals and the Economy AB 1383 Governor Signed Signed Hospital Hospital Becomes Law Provider Jan 1, 2010 Fee $2 billion Legislation Legislation (annually) (annually) 2009-2010 expires Dec 31, 2010 , 16
Hospitals and the Economy Hospital Unfunded Cost of Providing Services Medicare and Medi-Cal Patients Medicare and Medi Cal Patients S l Solves half of h lf f 1999 - 2008 the Medi-Cal $Billions Medicare shortfall. Medi-Cal $0 Does not -$1.0 -$2.0 resolve the -$3.0 $3 0 underlying -$4.0 problem. -$5.0 -$6.0 $6 0 -$7.0 -$8.0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 Year 17
Hospitals and the Economy Where do hospitals go from here? •Renewal of Medi-Cal waiver R l f M di C l i •Federal health care reform •Federal health care reform •State budget deficits g •Hospital provider fee 18
Hospitals and the Economy Questions A Anne McLeod M L d Vice President Finance Policy Vice President, Finance Policy (916)552-7536 ( ) amcleod@calhospital.org 19
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