Financial Crisis Underway For California Hospitals

January 14, 2009 7:49 a.m. EST

Sacramento, CA (AHN) - Like its home state, California hospitals are suffering financially caused by the economic crisis. Sick residents do not seek medical help because they have lost their jobs, want to preserve their savings due to threats of lay off and out-of-pocket expenses beyond their health budgets.

The medical facilities are also experiencing a rise in number of patients with no medical insurance, amid a reduction of the value of their holdings.

They also find it difficult to borrow funds since the credit market is almost frozen. The financial crisis gripping hospitals in the state has actually been going on for several years which had resulted in the closure of more than 70 medical institutions.

Several more are on the edge, according to Jan Emerson, spokeswoman of the California Hospital Association. Scripps Health chief executive Chris Van Gorder forecasts weaker hospitals will continue to suffer financially, while stronger ones will find ways to keep on going and even expand market share.

A survey by the CHA in November showed 73 percent more California patients had difficulty settling their bills, while there was a 33 percent hike in uninsured patients and 30 percent dip in elective medical surgeries.

The financial difficulty is felt by hospitals outside California. A poll by the American Hospitals Association revealed that two-thirds of medical institutions in the U.S. had reported a drop in elective surgeries which are major revenue streams, while one-thirds had a decline in overall admissions.