Like healthcare facilities across the country, Louisiana’s hospitals must confront formidable financial challenges as care delivery models evolve and reimbursement mechanisms change.
A recent Louisiana Hospital Association report on the state’s hospitals highlights the positive impact of these institutions on the state’s economy as well as the numerous financial trials they face.
Authored by Louisiana State University economics professor James A. Richardson, the report notes that the healthcare sector is the top provider of jobs in the state, with nearly 260,000 workers on healthcare payrolls in 2012. Of these healthcare workers, more than 34 percent (98,224) were directly employed by Louisiana’s 207 hospitals with an annual payroll of $4.62 billion, or 42.2 percent of the total healthcare payroll in 2012.
[See also: Medicaid can be a rural health lifeline.]
“Healthcare providers are a major economic influence within a community, and, of these healthcare providers, hospitals are the most dominant economic contributors in a community’s economy,” Richardson writes in the introduction to his 18-page report, Hospitals and the Louisiana Economy, 2014.
“Hospitals are very labor intensive, they’re major employers,” Richardson told Healthcare Finance News. “You can’t do everything with a machine. It takes a skilled workforce and a variety of people, from those taking care of the place in terms of cleaning, to those taking care of patients, to those working with technical equipment, whether it’s CAT scans or MRIs or blood tests, all the way up to physicians.”
But until reimbursement models stabilize, as the Affordable Care Act continues to be rolled out, hospitals in Louisiana and elsewhere will continue to face uncertainty regarding revenue sources.
From 2012 to 2013 alone, according to the LHA report, the percentage of net revenues for Louisiana hospitals coming from private insurers fell from 45 percent to 41 percent, while the percentage of revenue provided by Medicaid increased from 12 percent to 18 percent.
“If indeed there is a major change in hospital revenues, due to reductions in Medicare or Medicaid, obviously that’s going to have an impact,” Richardson said. “Hospitals may get smaller.”
Louisiana hospitals also have had to adapt to unstable economic conditions by cutting costs. The report says that 60 percent of hospitals in the state have reduced services, with another 33 percent contemplating a reduction in services; nearly one-third (31 percent) of Louisiana hospitals have left vacant positions unfilled, while another 35 percent are considering it; 13 percent have reduced community programs, with another 16 percent mulling it; and 9 percent have stopped construction and other projects or froze equipment purchases, with another 20 percent considering similar spending reduction measures.
Richardson emphasizes that while the first goal of any hospital should be to treat patients, it’s hard to ignore the economic impact of hospitals on a community through providing jobs and spending on local products and services.
“You don’t build a hospital to create an economic environment, but once you build it, it becomes one,” he said.