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Ailing Mississippi healthcare facilities facing

Economy hits hospitals hard

Hospitals are not the first thing to leap to mind when it comes to the economic development discussion, but their impact is profound, according to a 2007 study commissioned by the Mississippi Hospital Association.

Conducted by a New York company, the study provides the latest data on the financial punch hospitals provide to Mississippi.

In all, the state’s 115 hospitals had a $9.2-billion impact on Mississippi’s economy. That tally includes the direct contribution of hospitals, jobs created and income and tax revenue generated as a secondary effect.

That was the good news.

The bad: The study also showed that almost half of the hospitals were operating at a deficit.

In the middle of the worst economic climate the U.S. has seen since the Great Depression, the MHA is again surveying its members to see how they are coping. Specifically, the Association wants to gauge how the economy is affecting hospitals’ access to capital and patient volume.

What will almost certainly show up when the results arrive is the decline in cash reserves, a condition brought on by the struggles of the nation’s bond market.

“The bond market has really hit the hospitals,” said Shawn Lea, the MHA’s vice-president for strategic communications.

That represents one of two tsunamis the economic downturn is sending toward hospitals.

The other gained a lot of momentum last week, with the announcement by several major companies that they were making job cuts. Mississippi has endured its share of job loss, with the manufacturing sector losing thousands of jobs since last summer.

With the rise in unemployment comes the swelling of the state’s population without health insurance. The options for the 3.5 million people who have lost their jobs nationwide since the recession began more than a year ago are limited. They can enroll in Cobra coverage, Medicaid or simply pay for health expenses themselves.

A report by consumer group Families USA released earlier this month showed that only nine percent of the U.S. population could afford Cobra premiums, which can be three to four times more expensive than regular health insurance premiums.

Limited options for consumers usually translate to only one option for hospitals – debt write-offs, another financial body blow in an economy that has already provided plenty of them.

“This is kind of just the tip of the iceberg,” Lea said. “All those people (who lost their jobs) had insurance through their employer and will now be uninsured or trying to pay for Cobra coverage or trying to access Medicaid. The layoffs directly affect hospitals because of the relationship to the uninsured population rising.”

The Medicaid issue is one that has gotten a lot of attention since the 2008 session of the Mississippi Legislature. The funding method – how the state will pay its $90-million obligation to the program – has been he sticking point between the House and Gov. Haley Barbour and his allies in the Senate.

With the Medicaid rolls set to swell as unemployment rises in the state, the issue will become even more urgent.

“The smaller, rural hospitals are the ones most affected; they’re the ones that depend the most on Medicaid payments,” said Lea, who called all the elements hitting hospitals “a perfect storm.”

To solve the Medicaid funding problem, the MHA has endorsed a plan that would implement a tax on Medicaid-providing hospitals to pay half of the $90-million tab. That contrasts with a plan passed by the Senate last year and supported by Barbour that would put the full burden on hospitals.

The economic stimulus package President Barack Obama is pushing does include some relief for those with Cobra coverage. Like everybody else, Lea said the MHA is following the developments of the bill.

“We have to help fight the insurance problem,” she said. “Hospitals are beginning to realize that the uninsured is not just a social problem. It’s directly affecting their bottom line, so we’re all becoming much more active in helping those people find more insurance of some sort.”

Contact MBJ staff writer Clay Chandler at clay.chandler@ msbusiness.com .

About Clay Chandler

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