A Historical Perspective of the Effect of the Great Recession on Hospitals

At 18 months, the Great Recession of December 2007 to June 2009 is the longest recession since World War II. The recession led to soaring unemployment, resulting in loss of employment-based health insurance for millions of people. In addition to seeing increases in uninsured patients, hospitals experienced losses in their investment portfolios, which in turn increased bad debt, charity care, and uncompensated care nationwide. Hospital executives began to devise cost-cutting strategies to balance the rising debt, such as standardizing medical equipment, cutting staff positions, and delaying construction projects and capital expenditures as well as implementing value analysis strategies. The recession is officially over, and, although economic recovery has been slow and unemployment continues to be an issue, hospitals' net revenue started improving as of 2009 and hospital construction started increasing in 2010. Still, caution is warranted in the postrecession climate, because it is unknown what effects will be seen when the Baby Boomer generation begins using Medicare.