VCU study finds many hospitals facing struggles
- May 12, 2014
A Virginia Commonwealth University study has found that nearly a quarter of the hospitals it surveyed face financial challenges as federal health-care reforms take effect.
VCU researchers looked at how private for-profit and nonprofit hospitals fared during the 2007-09 recession and how the recession might affect their ability to respond to new industry challenges.
“Major payment reform and industry restructuring brought on by the passage of the Affordable Care Act will place significant pressures on hospitals of all types, but especially for financially weak and safety net hospitals,” according to the study, which was published in the May issue of the journal Health Affairs.
The study found that the recovery of financially vulnerable hospitals relied on increased revenue from services unrelated to patient care revenues while the profitability of their patient-care services continued to decline.
“The implications here are for policymakers,” Gloria Bazzoli, the lead author and a professor in the Department of Health Administration in the VCU School of Allied Health Professions, said in a statement. “You can’t use one size fits all when you look at the hospital industry and when planning the way hospitals are reimbursed. It is important for policymakers to design payment policies so that they do not expose weak hospitals to substantial financial risk that ultimately may compromise patient care.”
Of 2,971 hospitals studied, 24.6 percent were classified as financially weak before the recession, 13.4 percent as mixed and 62 percent as financially strong.
Eleven percent of the hospitals were nonprofit, safety net hospitals. Of that group, 27.9 percent were financially weak.