Quincy Medical's woes mirror the financial troubles facing many independent community hospitals nationwide that are not part of a health system or owned by a chain. Banks have grown reluctant to hand out loans in a lagging economy, making it difficult for hospitals to pay for capital improvements. Medicare and Medicaid reimbursement rates haven't kept up with hospitals' costs, administrators say. And many independent hospitals lack the clout to get higher payments from insurers and steeper discounts from suppliers because they aren't part of larger hospital systems, says Samuel Steinberg, a hospital consultant in Daytona Beach, Fla.
The new health overhaul law could exacerbate those financial problems. For example, it will require hospitals to adopt electronic health records and track and report patient outcomes. That will put more pressure on hospital profit margins, which average 1% to 2%, Steinberg says. The law also will make further cutbacks in Medicare and Medicaid payments.