When people lose their jobs, they often lose their health insurance, as well. When employers feel strapped, they buy policies with bigger deductibles and co-pays, or they drop coverage altogether.
That may leave fewer subscribers for such insurance companies as Cigna Inc. and Independence Blue Cross, the latter pegging its hopes next year on a merger with Pittsburgh's Highmark Inc. And hospitals and health systems such as Thomas Jefferson and the University of Pennsylvania may end up with fewer patients who have good private insurance, their best payer. Meanwhile, the demand for Medicaid increases just as tax revenue declines. On top of that, hospitals' investments are suffering as everyone else's.
Around the nation, hospitals are seeing a decline in admissions and an increase in bad debt - uncollectible bills for services. Patients may be delaying treatment because they cannot afford their part of the bill. Or, said Mark Pauly, a health economist at the Wharton School, they may think it's a bad time to miss work. "You may not want to take time off . . . if you're afraid you might be laid off," he said.
Alan Zuckerman, president of Health Strategies & Solutions in Philadelphia, said he expected to see consolidation and some hospital closures.
Hospitals typically will start by closing unprofitable units or reducing payments for training, said Lawton R. Burns, director of the Wharton Center for Health Management and Economics. Delayed expansion plans and administrative cuts also are likely.
"Smart hospitals will be making plans now to adjust," Burns said. - Stacey Burling