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Hospitals caught in financial squeeze, panel says

By : Anita Knopp Doll


While all agreed that quality health care is impor- tant to the community’s economic vitality, there was no clear consensus on how to meet escalating costs amid rising demand during a two-day conference on the role of health care in regional development.

The 7th annual Health Care Symposium on Health Care Management and Policy brought together experts from government, academia and the service sector to discuss a range of issues last week. The session also coincided with the annual meeting of the Northeast section of the Regional Science Association.

Binghamton Mayor Richard Bucci provided a local economic outlook during a luncheon. The program was organized by Manas Chatterji, professor of management.

In opening remarks, President Lois B. DeFleur said the University stands ready to partner with the community in working for high quality health care. “The whole community has a stake in it,” DeFleur said. “Health care is important to all of us.”

During a session on the impact of hospitals on the economy, Raymond Sweeney, executive vice president for the Health Care Association of New York State, said New York hospitals, which have had negative operating margins for the last four years, are being economically squeezed.

The presidents and chief executive officers of the community’s two primary health care providers — Peter McGinn of United Health Services and John O’Neil of Lourdes Hospital — echoed similar concerns.

While the hospitals are among the region’s largest employers, McGinn said they also contribute to regional productivity by providing access to quality care, allowing for quicker turnaround and less travel time. Ninety-five percent of all Broome County residents who need hospitalization go to local hospitals.

And the hospitals must provide service to all who come through the door, including the 18 percent of the county’s population without insurance. “The uninsured are not someone else’s problem,” McGinn said. “That’s our problem.”

The two hospitals combined provided almost $25 million in uncompensated care in 2002 and expect that amount to increase this year.

In addition, federal and state reimbursements have not kept pace with costs, McGinn said. Reimbursement for Medicare, a program for the elderly which pays for almost half of the local patient base, has increased only 8 percent in the last seven years, while costs have risen 23 percent. Medicaid payments, which support 10 to 15 percent of patients, have actually declined since 1997.

Government has attempted to constrain costs by underpaying providers and shifting costs to private insurers, McGinn said. “What businesses don’t understand is that what they save in taxes, they will pay in insurance premiums.”

Elderly populations, which require more health care, are growing. O’Neil said health care is also being squeezed by rising malpractice insurance costs, which increased by $4 million this year for both hospitals. A shortage of nursing and other medical specialties is driving up the cost of labor, and the downturn in the stock market is driving up pension costs.

The hospitals have taken aggressive measures to improve efficiency and cut costs, including eliminating programs, O’Neil said, but it hasn’t been enough.

“Neither business nor government can afford unlimited increases,” he said, “but there are real pressures that will continue to drive both health care costs and utilization.”

The two agreed the solution would require comprehensive and coordinated federal, state and local action. “Health care needs to be a major issue in the presidential election of 2004,” O’Neil said.

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Last Updated: 10/14/08