One of the most standard ways to measure the country’s hospital crisis is to count closures, but one hospital finance expert thinks that isn’t necessarily the right number to watch.
“If you just look at the metric of hospitals closing, you will miss the big picture,” said Duane Fitch, partner and leader of the national healthcare management division at Plante Moran.
Dozens of hospitals shuttered last year — but even more were forced to shed key service units, often emergency care, labor and delivery, psychiatric care or surgery, Fitch noted.
“There’s a lot of downsizing before — it’s very rare that a hospital is full-service one day and closed the next. It is a long process of continually evaluating what services can be provided within the budget and eliminating services that cannot,” he remarked. “Just because a hospital is open doesn’t mean it’s financially sustainable.”
The hospitals most vulnerable to this kind of slow erosion tend to be critical access hospitals in rural areas, as well as safety net hospitals in low-income urban communities, Fitch said.
Their financial reality is bleak — their patients are overwhelmingly covered by Medicare, Medicaid or no insurer at all, meaning reimbursement rates are pretty low across the board.
And recruiting physicians and nurses to work in these environments often requires paying a premium over what comparable hospitals elsewhere offer, Fitch added.
“You have a dynamic where provider expenses are significantly greater, and their reimbursement is significantly less,” he explained.
This gap puts nearly every subsidized service on the chopping block, Fitch pointed out. Obstetrics is often among the first to go — a hospital might scale back its NICU first, then pare down labor and delivery before eliminating OB services altogether. Surgery, oncology, dialysis, inpatient rehabilitation and psychiatric care tend to follow.
These types of cuts are made with the intention of stabilizing the hospital’s finances, but they rarely buy more than a little time, Fitch said. It’s more common that these service cuts delay the inevitable rather than prevent it.
The cumulative effect is a steady decline in access to care for the communities that need it most, he added.
The trend Fitch described begs the uncomfortable question of: if a hospital keeps cutting the services that made it essential to the community, can we really still call it a hospital?
“These hospitals can become unrecognizable compared to what they once were — and that is not an unusual dynamic these days,” Fitch declared.
Photo: onurdongel, Getty Images
