COSTS OUTSTRIP REVENUE
Financial gap in patient care widening at Hawaii hospitals
By Greg Wiles
Advertiser Staff Writer
The gap between what Hawai'i hospitals spend and what they receive in patient revenue widened to $150 million last year, according to a new report.
The shortfall compared with an $111 million gap between total expenses and net patient revenue in 2005.
"These new figures are extremely disappointing because they don't show that we've seen any improvement compared to last year's report," said Richard Meiers, head of the Healthcare Association of Hawaii, an industry group that represents hospitals, nursing homes, and home healthcare and hospice pro-viders.
"The situation in Hawai'i is not getting better, it's getting worse."
The financial trends report by Ernst & Young LLP and the Hawaii Health Information Corp. for Meiers' group shows the hospital business as a whole was profitable when revenue from investment income, asset sales, and non-patient operations such as parking lots was added.
But the patient portion of local hospitals continues to lose money, primarily because reimbursements from Medicare, Medicaid and the state's Quest program cover only 80 percent of expenses.
Total expenses for hospitals were $2.02 billion and compared with net patient revenue of $1.87 billion. The revenue figure also includes reimbursements from private insurers and others.
Net patient revenue as a percentage of total costs was 92.4 percent, the lowest in the nation. The U.S. average is 104 percent, said Terri Fujii, Ernst & Young managing director.
"That is not a good position that we want to be in," Fujii said.
The report released yesterday also shows:
Fujii said total hospital revenue was $2.09 billion when other income was added. That meant some hospitals were able to show a slight profit while others recorded losses during 2006.
She said hospital administrators are continuing to look for ways to cut costs, including reducing administrative space, selling off parts not related to patient care, consolidating clinics and discontinuing unprofitable services.
She said that if the reimbursement and expense trend continues, the state may see access to healthcare being eroded.
"The healthcare system in Hawai'i is still in financial crisis," Fujii said in a presentation at a Healthcare Association general membership meeting.
The financial status of the healthcare system is in contrast to separate reports that conclude that Hawai'i's residents are among the healthiest in the country.
The report follows one earlier this week finding that the state is the third-healthiest in the nation, with the country's lowest deaths from heart disease and cancer. But even state Department of Health officials have downplayed that high standing, saying more needs to be done to improve health, including bringing down Hawai'i's high diabetes rates and reducing obesity.
Reach Greg Wiles at gwiles@honoluluadvertiser.com.
