Health care providers hit by ailing economy
By BILL HENDRICK
“With gas prices going crazy, we had to do something,” he said. “So we are going to longer hours, and we won’t have to cut anyone’s pay.”
With the stock markets sagging, gas prices shooting over $4 a gallon and the economy ailing, doctors, dentists and hospitals are fighting to stay out of the red, but experts say it’ll likely be a while before their higher costs are passed on to consumers.
That’s because salaries and other contracts are negotiated at intervals over the year, said Ken Thorpe, a professor of health policy at Emory University.
“Providers have contracts with health plans,” said Paul Fronstin, director of health research for the Washington-based Employee Benefit Research Institute. “To the degree they can raise prices, they will, but they still have to be competitive.”
With medical inflation already running at 4.5 percent this year, compared with 4.1 percent for overall consumer prices, the rising costs will inevitably creep into patients’ bills, said Jeffrey Humphreys, a University of Georgia economist.
“I would expect prices to go up, but not because of oil or gas,” Humphreys said. “[But] labor cost pressures are extreme because the supply of medical professionals is insufficient.”
That’s good news for medical professionals. There’s a severe shortage of family and emergency room doctors, internists, nurses and allied health workers such as X-ray techs, who are in position to negotiate higher wages, Thorpe said. Most such professionals, he said, could find a job at any hospital or doctor’s offices in town.
Also, the health industry may be slower than retailers to pass along its higher costs for fear consumers will cut back on visits to doctors and dentists, said Erik Chiprich, vice president of equity research for New York-based BMO Capital Markets.
Elective procedures already are down, while consumer co-pays and their costs for insurance premiums are rising rapidly, as is the number of uninsured.
“Dental trips are, unfortunately, bought with discretionary dollars, and discretionary visits are the first ones to go,” said Martha Phillips, executive director of the Georgia Dental Association.
She said people have been cutting back on trips to their dentists, most of whom have openings on any given day. Free dental offices, such as the Ben Massell Dental Clinic downtown, are swamped.
“The demand and need for dental service has increased dramatically in our clinic,” said Dr. David Zelby, its volunteer chief of staff. “The current state of the industry will only add to that existing fire.”
What may hurt dentists most is the recent nosedive in consumer confidence, which makes people think twice about routine care, said Dr. Matthew Messina, an official of the American Dental Association.
Hospitals are feeling the crunch, too. While they must pay top dollar for medical professionals, few have yet to raise prices, said Kevin Bloye of the Georgia Hospital Association.
“Hospitals maintain a fleet of vehicles, and like everyone else, are getting hit with skyrocketing costs,” he said.
Mark Rowe, director of recruitment for WellStar Health System in Marietta, said the biggest problems facing hospitals is a shortage of professionals and paying the high salaries that those professionals can command.
Jobs in many fields are in such demand that hospitals regularly hold job fairs. DeKalb Medical has one set for July 17. Nina Montanaro of Piedmont said the hospital is “always hiring” clinical professionals. Northside’s Russ Davis said the hospital recently held a job fair that was “very successful.”
Retention can be a problem because many can’t afford to drive 30 miles to another hospital, said Andrea Wehrmann of Gwinnett Medical Center.
Bloye also said there’s a dearth of professors to teach in the health fields.
Rising unemployment means more people are or will be uninsured and thus unable to pay for emergency room visits, which hospitals by law must cover.
“Hospitals end up finishing in the red and wondering what’s next,” Bloye said.
Phil Miller, a spokesman for AMN Healthcare in San Diego, the nation’s largest health care staffing firm, said the shortages are nationwide.
“In thinking about where insurance companies stand regarding the recession, it is clear that they will be hurt because there will be fewer employees to cover as unemployment rises, and employers will be looking to cut health insurance costs,” Miller said. “Also, recession is bad for your health, so insurance companies will be paying more for benefits because it raises stress, and stress levels exacerbate everything.”
Which means, insurance rates also are likely to keep rising, he said.
What’s more, Chiprich said, only 60 percent of corporations are offering health insurance to employees, down from 69 percent in 2000. Also, the percentage of uninsured has risen from 14 percent to 16 percent in the past decade, he said. Of all people under 65, about 47 million are uninsured, he said, adding that “this hurts hospitals, which generally have to take people whether they can pay or not.”
Just in the past six years, premiums for family coverage under employer plans have increased 78 percent, compared with a 19 percent rise in wages and 17 percent for inflation over the same period, said Larry Levitt of the Kaiser Family Foundation.
Fronstin said the percentage of workers with access to health insurance is down from 75 percent in 2000 to 71 percent in 2006.
Numbers don’t tell the whole story, said Barbara Rosenberg, a supervisor with Jewish Family and Career Services in Atlanta. People are worried.
“I hear from my clients that they are super cautious about going anywhere,” she said. “We have a fleet of vans that pick people up and take them to doctors. We’re concerned that the drivers who transport clients or deliver meals, who are volunteers, will have some attrition. And we are afraid we are going to lose some of our home care workers because of the high prices of gas.” ”
People are cutting back on necessities such as medications, Thorpe said.
“In times like this, people are less likely to fill prescriptions,” he said, “or go to their primary care physician for preventative maintenance. And then they get sick and wind up in the hospital.”
Elective procedures are taking hits, Humphreys said, but not because of rising gas prices. In times like these, he said, people feel poorer.
But Dara Rubey, a supervisor in Nadolne’s office, feels a little better off.
“I come from Kennesaw,” she said. “That one day off, it’ll be like a raise.”
Many others, though, are worried, Nadolne said.
“I’m seeing more patients coming in with anxiety,” he said. “It’s very similar to what I saw just after 9/11. A lot of times, patients will come in and say, this hurts, that hurts, and I’ll ask them to be specific. And many will say, ‘I’m worried about my job.’ ”
COSTS ON THE RISE
â€¢ Total health care spending in 2007 was $2.3 trillion, or
$7,600 PER PERSON
â€¢ Health care spending expected to increase to
$4.2 TRILLION IN 2016
â€¢ Employer health insurance premiums increased by
6.1 PERCENT IN 2007
â€¢ Annual premium for an employer health plan for a family of four:
â€¢ Annual premium for single coverage:
â€¢ Worker’s contribution to an employer health plan for family of four:
HEALTH CARE SALARIES
Source: AMN Healthcare
25 percent of people with housing problems blamed medical bills as main cause
47 million Americans are uninsured, compared with 38.2 million in 2000
45 percent of small companies offer health insurance, compared with 57 percent in 2000
Dental inflation rose 5.7 percent last year, far more than the average rise in income
Sources: National Coalition on Health Care, Employee Benefit Research Institute, Emory University