Market Crash Hurts New Hampshire Hospitals

Health care costs have been rising steadily.
And that’s made it tough for many hospitals to break even.
Luckily for New Hampshire’s hospitals, over the last five years they made a killing in the stock market.
Last year, the state’s 23 nonprofit hospitals earned $92 million on Wall Street – a 360 percent jump over five years earlier.
That’s almost as much as they made taking care of patients.
Wealthier hospitals use investment dollars for expansions and to buy new medical equipment.
But small hospitals in poorer parts of the state sometimes rely on investment income to care for patients.
And that’s a problem.
When the market crashed, hospitals lost thousands.
Michelle McEwen is the CEO of Speare Memorial Hospital in Plymouth.
[SPEARE.INVEST.DOWN.WAV] The value of our portfolio has decreased significantly. I think it was about $400,000 alone just in the month of September.] :007
The market crash is forcing hospitals – especially poorer ones -- to tighten their budgets.
Kathy Bizarro is executive vice president of the New Hampshire Hospital Association.
[Bizarro.toughchoices.wav: If they don’t have that investment income -- that cushion -- to fall back on to fund their salaries, their expenses to provide services, then it’s going to have to come from somewhere. That means they’re going to have to make some real serious financial decisions.] 17 seconds
Some may need to cut patient services, she says.
That’s not uncommon when hospitals face financial hardship.
Bizarro points out that several struggling hospitals ended certain practices even before the market crashed.
[nomoreobgyn.wav: We’ve had several smaller hospitals stop providing ob services. We also had one of our critical access hospitals stop providing psychiatric care because there was not adequate reimbursement for those services. ] 18 seconds
Even if hospitals don’t get rid of services outright, they could deny care to uninsured and underinsured patients.
Nancy Kane is with the Harvard School of Public Health.
She warns people with high deductible plans – or no insurance at all – that they may not get the care they need going forward.
[deniedcare.wav: There’s a chance you won’t be provided services. And it happens in a lot of states. People get denied care all the time because of their inability to pay the bill.] 11 seconds
But healthier hospitals, like Speare Memorial in Plymouth, aren’t making such draconian choices.
Speare CEO Michelle McEwen:
[speare.patients.tops.wav: We’re going to do everything we can that will not affect patient care. And that’s why we’re delving into our non-operating funds is to make sure the front line staff is there, that the medical technology is there, so that the patients still get great care.] 17 seconds

Instead, McEwen says, the hospital is postponing investments in electronic medical records and information technology.
[delays.wav: We would like to automate our ER – our emergency department. Right now they’re still on a paper system and that’s a very costly application that has been delayed. ] 10.5 seconds
The hospital completed a $15 million renovation in 2006 – and McEwen is glad that she’s not looking for financing now.
She says that, like Speare, most New Hampshire hospitals were built in the 1950s – and that these 60-year old hospitals all need renovations.
But Kathy Bizarro of the New Hampshire Hospital Association says with investment income dropping like a stone, hospitals looking for construction loans are going to have a tough time.
[Bizarro.access.capital.wav: If they don’t have a strong cash position, which investment income is part of that, they will have a hard time being able to get other financing. The access to that capital is harder, as some CEOs have already told me, and the cost of that financing is going up.] 19 seconds
Just like homebuyers looking for mortgages, hospitals need cash in the bank to get loans at decent interest rates.
And for many hospitals, that cash is now dwindling.
For NHPR News, I’m Elaine Grant.