South Florida

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Fewer patients, more people withouf insurance, shrinking tax revenue and sagging investment portfolio are the major factors giving health careexecutivese heartburn. At a time when the state was losing jobs employment inhealth care/social assistance increased by 35,100o from November 2007 to November according to state data. The 4 percenf increase led all industries. But, layoffs have started, includinhg at . Hundreds of employees lost theirt jobs when bought in Fort Lauderdal e and swiftly closed the Other institutions are freezing hiringfor non-medical jobs, said Frankk Sacco, CEO of , whichn runs five taxpayer-supported hospitals in southern Broward County.
“Hospitalxs will have to cut their expense,” Sacco said. “Sixty percentr of hospital expenseis labor. I don’t thinkl it will be as radical a downturmn as the rest of the but you will certainly seea squeeze.” Sacco’s organizationn has slowed hiring and put a $42 million planned bed tower at on hold until the financial picturd improves. South Florida’s acute care hospital recorded morethan 2.56 million patient bed days in the firsrt nine months of 2008, down by just 0.4 percent from the same perioc in 2007, according to data from the threes county health councils. However, the differencse is in the typeof patients.
Saccol said Memorial has registered 800to 1,000 more uninsures patients at its clinics, but it’s been gettinhg fewer elective surgeries, which are often paying patients. Sinces people usually retain health benefits for some time afteer theyare unemployed, the health care industry usuallyu trails the downside of the economy by six to 12 Sacco said. “Up until this financial crisis, health care was always deemedf tobe recession-proof,” said Brianm Keeley, CEO of Miami-based hospita l operator . “When people lose their jobs and they will continue to come to the butthey don’t pay their Declining investment portfolios also wounded hospitals in 2008.
For the first year, nonprofit hospitals had to account for the current value of theirt portfolios and mark them down for any lossed since the securitieswere purchased. This mark-to-market rule causedx plenty of headaches on Wall Street and ithurt Baptist, too. Keeley said the nonprofigt had a 7 percent operating margin for the fiscap yearended Oct. 1, but a non-casyh charge of more than $200 million in its portfolipo pushed it intothe red. “We are still in a strongb cash position,” Keeley said.
“Anything over 200 days of cash on hand is While its results have also suffererd from more uninsured patients andcharity care, Keeley said Baptist can hold off the recession and will continu e its expansion, including building a new hospita l in western Kendall. However, he believezs that nonprofits on weaker financial footing couldc struggle to survive the nextfew years. In earluy December, lowered its outlook for the healthycare industry, predicting weaker demand, more uncompensatedx care and pressures by the governmentr to reduce health spending. Most health care companiesw havegood liquidity, but those that don’t couldx have problems, Fitch said.
“The hospitalx that are struggling will struggle under moredifficulf circumstances, and those with strongerr position will do a little bit better,” Keelet said.