By Annie Goeller, Daily Journal of Johnson County staff writer
As people have lost their jobs and insurance, local hospitals are seeing more patients who can't afford their medical bills.
One hospital is seeing twice as many patients coming in to try to work out payment arrangements and expects to send potentially hundreds of bills to collection agencies when former patients can't or won't pay their medical bills.
In the first four months of this year, local hospitals are forgiving more medical bills for low-income patients and turning more people over to collection agencies than they did last year.
Their profits are almost certain to be down for the year, officials said.
And if the economic downturn worsens, hospitals may need to look to drastic cuts, such as not funding all charity requests and requiring payment for services up-front.
For now, officials from Johnson Memorial Hospital, St. Francis Hospital & Health Centers and Community Health Network said they have not had to make drastic cuts, such as laying off staff, because of the increase in people unable to pay their medical bills.
But they are closely watching the numbers, especially as laid-off workers lose extended benefits, to see if more cuts will be needed.
Some people who were recently laid off received severance packages, an extension of their benefits or signed up for COBRA, a government program that allows laid off workers to continue receiving their health insurance by paying the total cost of their monthly premiums, including the money their employer would have paid.
In the next six months, those benefits could run out, and then hospitals will have a clearer picture of what they are facing, officials said.
All three local hospital networks have experienced an increase in patients who are considered to be self-paying, or people who are responsible for paying their medical bills because they do not have any or enough insurance to cover their care.
At Johnson Memorial Hospital in Franklin, self-pay patients increased 26 percent during the first four months of this year, compared with the same time period last year, hospital president and chief executive officer Larry Heydon said.
When those numbers increase, the need for charity care and the number of cases turned over to collections increase, he said.
"Most people want to pay their bills, but they're just not able to do that. It's a bad situation for all," Heydon said.
The number of cases for charity care and collections has increased by 64 percent at the Franklin hospital through April of this year, compared with January through April 2008.
Projections show that this year the hospital expects to spend $3.4 million on forgiven medical bills for low-income patients and try to collect $8.4 million from patients who can't or won't pay, hospital director of business development Bill Oakes said.
That total, or $11.8 million, is nearly equal to the cost of running the entire hospital, including salaries, utilities, supplies and taxes, for about a month and a half, he said.
And the story is the same across the region.
Charity care and collections cases increased 35 percent during the same time period this year at Community Health Networks, which includes Community Hospital South on County Line Road on the southside.
Last year, the same number was up 18 percent, chief financial officer Tom Fischer said.
And St. Francis increased 20 percent in its charity care from 2007 to 2008, though the number of cases turned to collections has not dramatically increased, said Greg Anderson, vice president of finance.
Officials expect numbers to be about the same this year, he said.
What they could do in the future depends on how many more patients come in who can't afford to pay for their medical care.
"There's no magic number or magic criteria out there. It's just the overall trends," Heydon said.
St. Francis delayed finishing construction on a six-story, $265 million patient tower at its southside hospital due to concerns in the economy. Work will end once the outer shell of the building is complete this summer.
Last year, officials at Johnson Memorial closed the skilled nursing unit at the Todd-Aikens Health Center, which had a deficit between $400,000 and $500,000 in recent years. The service is now offered in a 25-bed facility at the Franklin United Methodist Community.
And officials are looking at every cost they can, while avoiding layoffs and maintaining standards of patient care and community assistance.
They have come up with ideas for the long-term, worst-case scenario, including delaying more building projects, demanding payment up-front and not fully funding all the medical costs for low income patients if the money isn't there.
For now, that means some are expecting lower profits.
For example, the profit margin at Community Health Network has been cut in half over the past two to three years, Fischer said.
In 2008, the margin was 2.4 percent, when industry standards typically say hospitals should have between 3 and 5 percent to invest in projects and stay in business.
Those levels are OK for a while, he said.
"We hope we can manage our way through it," he said.
At Johnson Memorial, officials expect to lose about $2.5 million in revenue this year, due to the money being spent to forgive patients' bills and the money that won't be collected, even after a patient is sent to collections, Heydon said.
But they have some reason to be positive.
The hospital has received a boost through an increase in the number of patients they're seeing and procedures they're performing over the past two years.
Total hospital revenues, not including charity care and collections, increased 13.6 percent from 2007 to 2008.
At first, officials thought last year's increase was due to patients being diverted from Columbus Regional Hospital when it closed due to flood damage. But they appear to be seeing more patients this year, too, from all over the county, he said.
Based on the first four months of the year, the hospital is projecting that revenues will increase more than 8 percent this year, Heydon said.