Hospitals are accustomed to using words like sick, ailing and suffering - just not to describe their budgets.

But a report by the American Hospital Association suggests that, in the wake of the economic crisis, America's hospitals are hurting as much as the patients they treat.

Hospitals in Colorado Springs and nationally say patient numbers are down and unpaid bills are up.

For many hospitals, the credit crisis is crippling what financial officers call a "capital hungry" business that lays out big sums of cash for new technology and facilities.

"I can tell you, the report is eerily similar to the exact circumstances we're going through," said Mike Scialdone, chief financial officer for Memorial Health System.

The American Hospital Association surveyed chief executive officers at hundreds of nonfederal hospitals and analyzed financial data as recently as Nov. 10.

More than half of the 736 hospitals surveyed said reductions in staff were being considered; more than a quarter of hospitals were also considering reducing services.

Both Memorial Health System and Penrose-St. Francis Health Services report they have admitted fewer patients since the economic downturn, which officials attribute to people who are postponing elective or medical treatment that they deem optional.

Memorial has seen 3 percent growth in admissions over last year, but that is 5 percent less than budgeted. And in the last two months, admission numbers have fallen 3 percent compared with the same time period last year, Scialdone said.

Penrose did not have comparable statistics because of so many changes associated with the opening of the St. Francis Medical Center in northeast Colorado Springs in August, said Patrick Ballard, finance director. Still, he said, they were at least moderately in decline.

Penrose-St. Francis's capital expenses, such as the new hospital, are managed by parent company Centura, which so far has not postponed or canceled any projects, Ballard said.

He did not know if the parent company has seen interest-rate increases or faced barriers in borrowing.

At Memorial, interest rates have nearly tripled on auction-rate bonds that paid for major capital projects such as a new northern Colorado Springs hospital and downtown tower at Memorial Central. That amounts to about $1 million a month more in interest payments, Scialdone said.

About a third of the hospitals surveyed said interest expenses have risen, and 56 percent reported they will reconsider or postpone new buildings or renovations.

Scialdone said Memorial is considering a number of changes to squeeze money out of its budget, including staff "flexing," in which people may be sent home or relocated to busier parts of the hospital when patient numbers are low. Administrators also are considering eliminating positions through attrition, cutting back on supplies and restructuring its systems to lower administrative costs, he said.

For now, Penrose is not making budgetary or staffing changes in response to the economy, Ballard said.

Like virtually any investment portfolio lately, hospitals' investments are suffering mightily. The report showed hospitals' investments plummeted from $396.1 million in profit in the 3rd quarter of 2007 to $831.5 million in losses in the same period for 2008 - a $1.23 billion change.

Another wave may still be coming, the report warns. Medicaid claims and enrollment tends to increase in hard times as people lose jobs and insurance plans. The federal program pays just a fraction of a person's medical costs.

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Contact the writer: 636-0198 or brian.newsome@gazette.com

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