AHA (American Hospital Association) is a national organization that symbolizes hospitals and healthcare networks, also their patients and communities. For generations, American hospitals have been severely affected by the economic crisis. According to hospital reports it is clear that hospitals have been recording declining financial problems and decreased patient admissions. The hospitals’ money has become scarcer creating a risk that the hospitals might be closed. Hospital and health policy CEOs are so concerned about the impact brought about economic downturnnot only on their institutions and employees but also to the population at large.

Effects of the current economic situation on Hospitals

Hospitals and healthcare are the essential part of the economy. New private sector jobs are created annually. Hospitals alone employ a lot of people regardless of the economic situation affecting them. AHA is on the way of facing current challenges i.e. by relying on its foundation of employees. Annually AHA releases reports that show current information on both health and hospital trends. These reports are made available through AHA’s TrendWatch Chartbook.

The impact of the today’s recession on hospitals all over the country has costed the country a lot. People are losing jobs and finding a reemployment in Medicaid programs. Medicaid is a program funded by the states and it accounts up to 25 percent of a state’s budget.  Before the unstable period in the economy enrolment in the program was growing, an effect is now being quickened by the shaky economy. Patients are also losing their health insurance.

The current crisis will challenge the survival of some hospitals. The capital crunch is making it difficult and expensive for hospitals to finance facility and technology needs bringing the risk of closure. The economic climate has few patients going to hospitals. Consequently, 53 percent of hospitals’ reports show that there are decreased Emergency Department visits. With the increased dependency on government payers and decreased patient visits across the country more hospitals are reporting negative total margins. Financial health is becoming worse as patients seek less care and investment gains turn to losses. With shortage in drugs increasing, the American Hospital Association (AHA) took a survey on its members and found out that shortages have affected normal patient care in hospitals. The survey conducted reveals that most of the hospitals are in short of drugs.

Goals and Strategies

The crucial question, what should be put in place to ensure that hospitals do not close due to the economic crisis. For hospitals to withstand the situation a number of things need to be done; at first, a hospital needs to monitor productivity and resource consumption as it is one of the largest expenses for hospitals. Therefore, there’s a need to monitor and control expenses to avoid misuse of finance. The hospital considers what the patient will require to ensure that patients are receiving the highest quality care while on treatment. It is for the benefit of the hospital to have better financial oversight and management because through that they are able to regulate finances thus preventing bankruptcy.

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Hospitals need to increase or change the quality of services they provide for them to compete in the market. Hospitals can also withstand economic crisis through consolidations and acquisitions achieved by merging with stronger facilities.  

Economic downturn is forcing hospitals to consider making changes such as staff cut, cutting of benefits and services to weather the economic storm. Hospitals all round are so determined in finding ways to save money and in this case they may have to cut staff due to financial difficulties.

Uninsured patients are provided with uncompensated care by charging uninsured patients for non-emergency treatment. Hospitals charging fees for non-emergency room services tend to divert patients from using the emergency room department. According to hospital reports, uncompensated care costs total up to 41 billion annually which is a significant loss to the industry.

Similarities and differences

Hospitals are less affected compared to other industries because the state has programs such as Medicare and Medicaid for hospital staff to seek reemployment. The programs cover about half of the patient care provided by hospitals. One notable factor for the health care industry is the potential impact that Medicare reimbursement will have on operators.

Hospitals, healthcare and other industries face financial loss. Capital becomes tight and recovering the impact will take time.

Opportunities for hospitals brought about by this economic environment

Healthcare industry is among the safest sectors for employment regardless of the economic downturn it faces. The hospitals’ industry is an economic mainstay thus providing stableness and growth in times of recession. Health care has contributed in providing an average of 24,000 jobs per month. 5.4 million people get employment opportunities from hospitals and they create more than 2.2 trillion dollars of economic activity.


When hospitals are unable to provide services efficiently it may have a devastating effect on the quality of health care in the United States. Economic crisis can cause hospital closure and this can result to loss of quality life. Even though there are solutions to the economic crisis but the solutions are limited and can fix only some problems. Health reforms will have to consider changing the financial conditions of the hospitals but the future for sure is still uncertain. Current health care bills show strong help for government programs like Medicaid and Medicare. This may hurt hospitals which have been experiencing financial problems due to low reimbursement. If levels of reimbursement will be improved, hospitals will acquire enough capital to continue their normal day-to-day operations. The challenges brought about by the economic crisis are extremely felt in the industry and the best way through the situation is to balance the medical needs of the entire community. Fortunately, recessions are not permanent and it is a blessing that we have dedicated medical staff.

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