The ill effects of the nation’s struggling economy are being felt by Iowa’s hospitals, according to data gathered by the Iowa Hospital Association.

Comparing data from the fourth quarter of 2008 to the same period in 2007 shows declines in virtually all service areas, from home health visits (down 5.2 percent) to inpatient surgeries (down 2.2 percent).

More significantly, charity care and bad debt increased 13.3 percent, meaning Iowa hospitals are treating more patients who are unable to pay for their care.  Nearly $72 million in charity care and bad debt was provided during the last three months of 2008, a record amount for a single quarter.

Such losses have also impacted hospitals’ already thin margins.  Operating margins have fallen from 2.8 percent for the final quarter of 2007 to .8 percent in 2008.  But when investment losses of hospital reserves are calculated in, margins that were at 5.5 percent in 2007 slid to -9.6 percent at the end of 2008.  This equates to an overall loss of more than $160 million in the fourth quarter alone.

In all, 45 percent of Iowa hospitals lost money on operations and 45 percent of Iowa hospitals lost money on total revenue in the fourth quarter of 2008.  This compares to 45 percent losing money on operations and 20 percent on total revenue in 2007.

“Just like other businesses, hospitals are subject to the hardships of the economic downturn,” said IHA President/CEO Kirk Norris.  “But on top of those issues, hospitals are expected to provide an essential public service, every day and at all hours, at a time when a growing number of individuals are in need.”

Also unlike other businesses, hospitals experience huge losses because Medicare and Medicaid, which together make up about 60 percent of Iowa hospital revenue, do not cover the full cost of providing care to their beneficiaries.  In 2008, Iowa hospitals lost more than $275 million to the two programs.

“As political leaders in Des Moines and Washington, D.C., look for ways to address and stabilize the economy, it is important they remember the burden government health care programs already place on hospitals and physicians,” Norris said.  “Health care is a social and economic cornerstone for Iowa and the nation, now more than ever.”

Hospitals in Iowa employ more than 72,000 people and have a $5.8 billion impact on the state’s economy.  In counties where they are located, hospitals are typically among the largest employers.