Hartford Business Journal

HARTFORDBUSINESS.COM | October 10, 2022 23 especially small hospitals like Bristol that don't have the system resources, are struggling significantly just one year later." The past few years haven't been easy for Bristol Hospital, which has been hit hard by the pandemic. The Hartford Business Journal recently reported that Bristol Hospital recorded a nearly $14 million loss in fiscal 2021, largely from declines in admissions, emergency room visits and surgeries. That led the hospital to make layoffs in June. Bristol Health's executive team, including Barwis, also took 8% salary reductions. Barwis said the moves led to $4 million in immediate savings. The financial pressures have forced the hospital to think more seriously about potential partnerships or mergers, Barwis said. Middlesex Hospital is also one of the few remaining independent hospi- tals in Connecticut. An analysis by Kaufman, Hall & Associates released Sept. 15 by the American Hospital Association shows more than half of U.S. hospitals are projected to operate in the red through 2022. Nationally, hospital and health system expenses are expected to increase by nearly $135 billion this year, largely due to expenses related to retaining and supporting workers. Labor costs are projected to increase by $57 billion over 2021, and contract labor by $29 billion. A spokeswoman for Trinity Health of New England, parent to St. Francis Hospital and Medical Center in Hartford, said healthcare systems are experiencing staffing shortages, requiring them to use staffing agency labor, which is more expensive. While Trinity's net patient service revenue was relatively flat between fiscal 2021 and fiscal 2022, increased labor costs, along with other infla- tionary challenges, drove expenses up $102 million in fiscal 2022. The hospital system's overall operating margin for fiscal 2022 was -2.4%, compared with a positive 1.6% margin in fiscal 2021, excluding pandemic funding. Medicare costs Costs are being driven up partly by an increase in patients who are on Medicare and Medicaid, as more people reach the age of 65, Capece said. On average, 40% to 50% of the patients hospitals treat are on Medi- care or Medicaid, so when govern- ment-set reimbursement rates don't keep pace with inflation, hospitals have to cover the shortfall by passing costs onto private insurers. "People who have commercial insurance are generally paying a premium to subsidize people who are on Medicare and Medicaid or people who have no insurance at all," Capece said. Mark Schaefer, vice president of finance for the Connecticut Hospital Association, said hospitals are looking for higher reimbursement rates that come closer to covering the actual cost of treating patients. "Without some federal action and recognition, at both the state and federal level, that reimbursement is needed that covers costs, it's going to be hard to get out of the hole," Schaefer said. Middlesex Hospital, which has an endowment of about $100 million, is faring better than some. "We've tried not to use the principal; we've tried to live off the earnings to the extent that it could help supple- ment our losses," Capece said. "It's not something that you can rely on every year. And it's not something that you can sustain for a long period of time." Hospitals are making changes to adapt. On Sept. 22, Yale New Haven Health system announced that it expected a $250 million budget deficit in 2023, and would cut 155 management-level jobs. Some hospitals might merge to lower their costs, while others could be forced to scale back services, executives said. "We're already seeing that hospitals are laying employees off, closing down services, more mergers, which leads to less competition and usually higher prices," said Martin, Middlesex Hospital's CFO. CT HOSPITALS' COMBINED OPERATING MARGINS FY 2018 FY 2019 FY 2020 FY 2021 Net Patient revenue $11,691,395,084 $12,427,166,410 $11,952,887,384 $13,558,471,297 Other operating revenue $721,173,652 $746,676,374 $1,737,522,612 $1,370,226,943 Total operating revenue $12,412,568,736 $13,173,842,784 $13,690,409,996 $14,928,698,240 Total operating expenses $11,867,696,569 $12,555,673,515 $13,649,522,500 $14,591,303,330 Operating margin $544,872,167 $618,169,269 $40,887,496 $337,394,910 Source: Office of Health Strategy Building Ideas That Work... Building Ideas That Work... Contact us at 860.482.7613 or visit us at BorghesiBuilding.com 2155 East Main Street Torrington, Connecticut 06790 © 2011 BlueScope Buildings North America, Inc. All rights reserved. Butler Manufacturing ™ is a division of BlueScope Buildings North America, Inc. Whether you are a manufacturer or distributor, Borghesi Building & Engineering Co., Inc. will guide you to provide the best solution for your facility. Providing quality and reliability with design and energy efficient construction. With over 80 years of experience our processes will help your dream to be realized. ATLANTIC STAR NAPOLI FOODS WHOLE FOODS

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