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Community Hospitals Are Disappearing. Economic and Competitive Headwinds Challenge Independence and Survival.

By Stewart Gandolf, Chief Executive Officer

sign closedCommunity hospitals are scrambling, according to a recent article in USA Today, to survive and remain independent. But “scrambling” doesn't seem like an adequate description if you also read the article in Becker’s Hospital Review a few days earlier: Challenges Facing Community Hospitals.

Both publications present authoritative industry voices. “Over the past decade, the number of independent community hospitals has declined because of mergers and bankruptcies, according to the American Hospital Association (AHA). From 1999 through 2008, the number of independent hospitals has fallen by 290,” USA Today reports. “So far this year, 70 hospitals and long-term care centers, including 14 independent non-profits, have been targets of acquisitions, according to Irving Levin Associates, a Norwalk, Conn., firm that tracks merger activity in the health care industry.”

The 120 year old Quincy Medical Center north of Boston is USA Today’s case in point; recent years of cost-cutting, layoffs and other austerity measures have not stopped the red ink. “But now there are serious questions about whether the medical center can maintain its independence from corporate ownership or, over the long run, survive.” Roll-ups seem to have the edge over independence. Becker’s cites AHA stats: “Of the 5,010 community hospitals in the nation, the AHA reports 2,868 are now part of healthcare systems.”

There are some exceptions; a few independent hospitals are keeping their financial heads above water. But by all accounts, for most community hospitals, the bottom line is the bottom line.

“Banks have grown reluctant to hand out loans in a lagging economy, making it difficult for hospitals to pay for capital improvements. Medicare and Medicaid reimbursement rates haven't kept up with hospitals' costs, administrators say. And many independent hospitals lack the clout to get higher payments from insurers and steeper discounts from suppliers because they aren't part of larger hospital systems…” according to USA Today. The Becker’s Hospital Review article subdivides the issues into “10 challenges,” but virtually all are the same serious money matters.

You can read the details in the USA Today article here, and the Becker’s Hospital Review item here. We’d like to hear your comments.

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