When it comes to getting medical care, a growing number of people are avoiding hospitals.
There are exceptions, but consumer cost pressures, urgent care centers and drugstore clinics are taking hospitals’ lunch money as they scramble for ways to cut costs, merge with bigger systems and otherwise partner to provide medical services to keep the lights on. The trend isn’t new.
But now, a report by a Warrendale-based trade group points to health insurers as a big part of why hospitals are losing their luster. The reason is simple cost-cutting, according to the Healthcare Council of Western Pennsylvania. Blood work, medical scans and other services cost less outside the hospital, so insurers send their customers elsewhere.
“You’re living off your balance sheet,” said Denis Lukes, CFO of the Healthcare Council of Western Pennsylvania. “In the long term, that’s not sustainable. A lot of these community hospitals are just trying to survive.”
Highmark spokesman Aaron Billger defended the Pittsburgh insurer’s cost-cutting efforts, saying that consumers are becoming smarter about health care choices while the quality of care has improved.
“The quality of our members’ care has increased while these inpatient stays have decreased and this has led us to acknowledge that our members are getting better care,” Mr. Billger said in a statement.
Hospital admissions in Western Pennsylvania were off 2.74 percent to 486,617 in fiscal 2018 from 500,310 in 2017, a survey of 62 hospitals by the Healthcare Council found.
Inpatient surgical operations slipped 4.3 percent during the same period. At the same time, emergency room registrations fell 3.4 percent to 1.7 million in 2018.
Even as the average hospital revenue from core medical services ticked up to 4.6 percent in 2018 from 4.3 percent a year earlier, the Healthcare Council says more than half of the 62 hospitals surveyed, or 53 percent, saw operating margins sink over the past year.
At Washington Hospital, for example, admissions fell to 11,432 for the year ending June 30, down 8.6 percent from the same period in 2017. Emergency department admissions dipped 3.7 percent.
Inpatient surgical cases slipped 1 percent for the year, 2,233 in 2018 versus 2,257 a year ago.
Fewer surgeries and the drop in admissions translated into a 3.2 percent loss in operating revenue at Washington Hospital for the year — $240.4 million in revenue in 2018 compared to $248.4 in 2017.
“The long term trend line has been going down for a long time,” CEO Gary Weinstein said. “The regional decline in inpatient admissions, surgery, ER admissions — that’s consistent with what we’ve seen here.”
And health insurance costs aren’t helping: plan deductibles for individuals have tripled since 2008, growing eight times faster than wages, according to a new study by the Henry J. Kaiser Family Foundation.
The average single deductible has more than doubled since 2008 — $1,573 compared to $735 back then.
Higher health insurance costs mean delayed or skipped medical care, Healthcare Council’s Mr. Lukes said.
“If I can delay my hip surgery for another year or two, I’m going to do that,” he said. “There’s no question people are putting these things off.”
Highlands Hospital CEO John Andursky said the trends identified in the Healthcare Council survey are familiar to those at his 64-bed Fayette County facility.
Highlands is fighting back by repurposing existing space at the Connellsville hospital and by expanding niche outpatient services, including care for people with autism.
Highlands reported revenue of $30.1 million in 2016, the most recent figures available, finishing the 12 months with a balance of $1.8 million. Financial reports for fiscal 2018 were being audited and not available, Mr. Andursky said, but he said the hospital would break even for the year.
Enrollment is growing for an autism program that Highlands offers at the former Zachariah Connell Elementary School in Dunbar Township, which the hospital bought in 2015. Five staff members were hired in October, Mr. Andursky said.
The school, which has a capacity for 72 students, has an enrollment of 24. In addition to autism services, an outpatient women’s health center is planned at the school.
At the main hospital, Highlands is converting underutilized space into a 14-bed step-down unit for patients with behavioral health problems.
“It does open up some doors for us to reinventing ourselves,” Mr. Andursky said.