2010 June 13 Sunday
Hospitals Lose Immunity To Recessions

The depth of the recession and the huge portion that health care takes in the economy have finally made health care spending susceptible to recessions.

During past recessions, the financial stability of hospitals seemed to be nearly indestructible. But researchers at the University of Michigan Health System and St. Joseph Mercy Health System say the current national economic crisis may be an exception.

Hospitals are reporting declining profits, likely as a result of Americans losing health insurance as they lose jobs. As a result, hospital plans for renovation and new construction are being scrapped, and hospitals are being forced to reduce hospital staff, according to an analysis in the just-released May/June issue of the Journal of Hospital Medicine.

The researchers speculate hospital cutbacks may risk the quality and safety of health care delivery, and urge the federal government to improve public awareness of overcrowding emergency services, nurse-to-patient ratios and use of information technology.

The medical industry used to cruise thru recessions little affected. But with medicine now over 17% of GDP and rising it is just too large a pie slice to remain immune to downturns. Governments can't afford to fully compensate for declines in private sector spending.

We aren't many years away from the point where medical spending will actually drop from one year to the next. An approaching shock to the economy will cause a large enough economic contraction that per capita medical spending will fall in spite of an aging population and in spite of more government intervention in health care.

Share |      By Randall Parker at 2010 June 13 11:19 PM  Economics Health


Comments
A.Prole said at June 14, 2010 1:05 AM:

The English are very used to health expenditure being slashed according to the economic situation of the times, it's a perennial feature of English life.

Lyle said at June 14, 2010 2:46 AM:

Also, a number of non-life-threatening conditions have been medicalized. Elective treatments for hair removal, elective eye surgery, etc., are making up a greater percentage of medical costs and can be foregone in a poor economy.

Matt@occidentalism.org said at June 14, 2010 5:59 AM:

Some of the high costs can be reduced by having nurses and pharmacists do some of the minor things that doctors do, like prescribe simple medicines for simple conditions.

Gorilla said at June 16, 2010 1:48 AM:

Now that fewer people are plumping for elective or essentially cosmetic surgeries, the hospitals want the federal government to spend money telling everyone how poor and broke the hospitals are? What a pathetic joke!


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