Small Hospitals Facing Economic Plague Which May Have No Cure

Article excerpt

Federal fund cutbacks, high operating costs and competition from other providers have brought on a recent epi demic among many small hospitals that may not have a cure, the national accounting firm of Touche Ross said Friday.

"These three issues alone seem to account for the high degree of vulnerability to failure that the respondents express," noted Ray Cinsneros, national director of health care services for Touche Ross. "The fourth, fifth and six concerns - indigent care, availability of capital, and federal and state regulations, which ranked close together - are one third less significant than federal cutbacks."

In a national survey taken by Touche Ross, 43 percent of the 1,224 hospital adminsitrators who responded say they may be forced to close within the next five years.

The hospitals in dismay are those with fewer than 100 beds, partially threatened by larger hospitals with 400 beds or more.

The survey results represent the responses of 21.4 percent of the 5,719 short term hospitals throughout the country. Federal and psychiatric hospitals and long term care institutions were not included in the survey.

While malpractice insurance premiums have increased from 150 to 250 percent over the last five years, this has triggered a major concern among respondents, relating to malpractice suits. Respondents expect their malpractice premiums to increase an additional 40 to 90 percent five years from now.

"We are somewhat surprised that respondents ranked malpractice suits so far behind the first three issues," said Cisneros. "There is a clear indication from the responses that many hospitals anticipate some form of tort reform."

Cisneros explained that the survey findings did not support the commonly held opinion that the prospective payment system has resulted in an income increase from operations, 40 percent of the survey respondents said that their income from operations has increased under the medicare prospective payment system, while 45 percent say it has decreased and 15 percent say there has been no change. …

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