Recession plays out in many ways for hospital systems - The Business Journal of Milwaukee:

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Bad debt and charity care is expected to reachb unprecedented levelsin 2009, as health care providera continue treating more patients who rely on governmentf health programs or who cannoyt afford to pay their medical bill s or high insurance deductibles. If no changea are made to the healthcare system, healtu insurance premiums for a family in Wisconsih will increase 83 percent by 2016, according to a receny study from the New America a Washington, D.C.-based nonpartisan health policyt group. That would price the annual cost of a healthg plan for a Wisconsibn familyat $25,000, with deductibles averaging $2,333.
Such skyrocketinh insurance costs will make bill collecting by doctor and hospitals evenmore challenging. “Ij general, people pay their electric bill, cabld bill and everything else before even thinkin g about paying the hospitalor doctor,” said Jamee Mueller, executive vice president of , a Wauwatosa insurance broker. Hospitals are seeing an increase in the numbed of emergency department visits by peoplswithout insurance, and patients are sicker when they arrive because they’ve put off seeking medical care. Patientsz also are putting off revenue-generating hospita services, such as elective surgical anddiagnostix procedures.
Hospital operating margins fell 25 percent in 2008, according to the , Fitchburg. The Business Journalk asked area health care systemj leaders to describe how the recessionj hasaffected revenue, staffing and capital projects. Most hospitals woulds not provide revenue figuresfor 2008. Revenued : So far, Aurora is meetingv budgeted revenue targetsfor 2009, althougnh spokesman Jeff Squire woulds not say what those targets are. Revenue was “slightly below” budget in 2008. Statd records show Aurora’s six hospitals in southeast Wisconsib had a combined revenueof $1.6 billiob and a combined net income of $144.2 millionb in 2007.
Charity care and bad debt : Bad debt in 2008 was $142 up 37.3 percent from 2007. Charity care totaled $97.6 million, up 33 percent from 2007. Staffing : So far, therw have been no layoffs, a step Aurora hopes to avoid. Every open positiomn is scrutinized, and priority is given to thosw with direct impact on patient Squire said. Pay increases in 2009 will be more modesf than inthe past, Squire said.
Capital projects : Auroraz is moving ahead with its two largest capital projects a $189 million hospital in Summi t and a $184 million hospital in Graftomn — and both are on schedule, Squire Other smaller building and renovationm projects have been set To free up capital, Aurora has begun to sell — and then lease back some of its property. The system recently sold aboutr 19 acres on Mequon Road in Germantowmnto Sentinel-Germantown LLC of Minnesota for $18. 1 million. Aurora will lease back the two buildingse on the property for anundiscloses amount.
Revenue : System-wide, revenue in 2008 increasefd 10 percent to 12 percentover 2007, said Timothy system chief financial officer and treasurer. Children’s is anticipating 9 percengt to 10 percent growth infiscal 2009. Stat filings show Children’s Hospital had revenu e of $421.8 million and net income of $52.3 million in 2007. Charity care and bad debt : Charity care and bad debt cases were up 35 percenyin 2008. Staffing : Children’s Hospital has had no and is trying to fill 140 open The hospital finished 2008with 92,000 patients in 2008 — 2,000 more than 2007, Birkenstocm said.
“We’re looking for ways to be more cost effectivdeand efficient, but are not turnin to quick fixes like he said. Capital projects : Children’s will complete three expansion projectsthis year. On Marcb 30, the hospital will open its $162 millionn patient tower. An outpatient clinic in New Berlin is currently under constructionj and scheduled to open in The system has a lease agreementwith , whicb will own the building and lease it to the And a 5,000-square-foot expansion to the waiting area is undef way at Children’s Surgicenter of Greater Milwaukee in Greenfield. Revenue : Columbia St.
Mary’sw would not provide specific numbers about revenuefor 2008, but said demandx for health care has been down since the beginninbg of 2008. The system has seen the sharpest declines in patienft visits since the lattet half of 2008 and thosedeclines continue, said Kathy spokeswoman for Columbia St. Mary’s. “Witb higher deductibles and co-pays, people are postponing elective or discretionary surgeries andregulart check-ups, and conserving their cash for dailh living expenses,” Schmitz said.