News | January 20, 2008

Struggling Medical Delivery System Impacts Hospitals and Physicians Hardest in New Orleans

January 21, 2008 - Physicians and hospitals continue to feel the effects of the struggling medical delivery system in the new report “New Orleans Market Overview report, the burden of uncompensated care,” by HealthLeaders-InterStudy, which reports Medicare reimbursement rates and a shortage of healthcare workers are the key influences impacting these market segments.

“A shortage of healthcare workers has driven up the price of labor, making Medicare reimbursements insufficient to cover hospitals' current expenses,” said Josh Kelley, HealthLeaders-InterStudy market analyst and author of the report. “These facilities remain heavily reliant on the state and federal governments to keep them afloat during these turbulent financial times.”

A large upswing in uninsured patients and increased labor costs that have outstripped Medicare payments have resulted in major losses for the area’s largest providers. Hospital executives say rising salaries, which are needed to attract professionals and service workers in the tight market, are a primary cause of hospitals’ financial problems. An additional concern is that hospital Medicare reimbursements are based on pre-Hurricane Katrina cost data, resulting in payments that do not reflect current costs.

Physicians struggle financially because many of their patients have no way to pay for treatment. Many workers returning to the region have jobs in the service and construction industries that do not offer health benefits. On the positive side, state lawmakers allocated $64 million in 2007 to increase Medicaid reimbursements to physicians. Most physician practices remain in New Orleans’ suburbs, where medical services and the region’s population are now concentrated. The long-term stability of this market segment depends in part on the presence of residency programs that draw new physicians to the area.

For more information: www.decisionresources.com and www.healthleaders-interstudy.com

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