The State of America’s Hospitals – Taking the Pulse A CHART PACK Findings from the 2006 AHA Survey of Hospital Leaders

1. The State of America’s Hospitals – Taking the Pulse A CHART PACK Findings from the 2006 AHA Survey of Hospital Leaders

2. Executive Summary • Hospitals face workforce shortages that are affecting patient care. • Hospitals had an estimated 118,000 registered nurse vacancies as of December 2005. • Half of emergency departments (ED) are “at” or “over” capacity. • A majority of urban hospitals experience time on diversion. • The most common reason for diversion is lack of staffed critical care beds. • 42% of hospitals experienced gaps in specialty coverage in the ED. • More than a third of hospitals now pay some physicians for specialty coverage. • The majority of hospitals in “crisis states” face double-digit increases in the costs of medical liability coverage. • Nearly one-third of hospitals report the crisis is having a negative impact on the hospital’s ability to provide services. • Obstetrics is the service most affected. • Hospitals continue to face significant increases in the costs of pharmaceuticals and other supplies. • Hospitals are taking a variety of actions to bolster disaster readiness including participation in large scale drills, establishing back-up communications plans and developing resource sharing plans with other hospitals.

3. Survey Methodology • Survey was sent to approximately 4,900 community hospital CEO’s in late February 2006 via fax and Email. • Data was collected through March 2006. • Unless otherwise specified, data reflects the above mentioned time period. • A total of 1011 responses were received, a response rate of 20%.

4. Overview • Background • Workforce • Hospital Capacity, Emergency Department Diversion and Specialty Coverage • Medical Liability • Health Care Costs • Disaster Readiness

5. Background

6. The demand for hospital care is rising. Inpatient Admissions and Outpatient Visits 1990 - 2004 Outpatient Visits Outpatient Visits (millions) Admissions (millions) Inpatient Admissions Source: AHA Annual Survey

7. Hospital total margins are down 22 percent from pre-Balanced Budget Act levels… Total, Operating and Patient Care Margins 1997 (pre-BBA) vs. 2004 Total Margin Operating Margin Patient Care Margin Source: AHA Annual Survey

8. …the majority of hospitals lose money serving Medicare and Medicaid patients while one-third lose money on operations. Percent of Hospitals Losing Money, 2004 Source: AHA Annual Survey

9. Hospital Payment Shortfall Relative to Costs Medicare and Medicaid, 1997 - 2004 (in billions of dollars) Growing government shortfalls put the financial health of hospitals at risk. 1997 1998 1999 2000 2001 2002 2003 2004 Billions of Dollars Medicare Medicaid Total 2004 Medicaid and Medicare Shortfall of $22.1 Billion Source: AHA Annual Survey

10. Survey ResultsWORKFORCE

11. Hospitals face workforce shortages in key care-giving professions… Chart 1: Vacancy Rates for Selected Hospital Personnel December 2005 118,000 RN Vacancies* Source: 2006 AHA Survey of Hospital Leaders Note: 118,000 vacancies is a national estimate created by extrapolating the vacancy rate to all 4,919 community hospitals in 2004.

12. ..that are perceived to be getting worse… Chart 2: Percent of Hospitals Reporting Recruitment More Difficult in 2005 vs. 2004 Registered Nurses Pharmacists Laboratory Technicians Imaging Technicians Billing/Coders Nursing Assistants LPNs Housekeeping/ Maintenance IT Technologists Source: 2006 AHA Survey of Hospital Leaders.

13. …and are affecting patient care. Chart 3: Percent of Hospitals Reporting Service Impacts of Workforce Shortage, 2005 Decreased Staff Satisfaction ED Overcrowding Decreased Patient Satisfaction Diverted ED Patients Type of Impact Reduced Number of Staffed Beds Delayed Discharge/ Increased Length of Stay Increased Wait Times to Surgery Discontinued Programs/ Reduced Service Hours Cancelled Surgeries Curtailed Acquisition of New Technology Curtailed Plans for Facility Expansion Source: 2006 AHA Survey of Hospital Leaders

14. Survey ResultsHOSPITAL CAPACITY, EMERGENCY DEPARTMENT DIVERSON AND SPECIALTY COVERAGE

15. Most EDs are “at” or “over” capacity… Chart 4: Percent of Hospitals Reporting ED Capacity Issues by Type of Hospital 2006 68% 31% 75% 45% 50% Source: AHA 2006 Survey of Hospital Leaders

16. …and a majority of urban and teaching hospitals experience time on ED diversion… Chart 5: Percent of Hospitals Reporting Time on Diversionin Last 12 Months Source: AHA 2006 Survey of Hospital Leaders

17. …most often caused by a lack of staffed critical care beds. Chart 6: Percent of Hospitals Citing Factor as Number One Reason for Ambulance Diversion, January 2006 Lack of Staffed Critical Care Beds ED Overcrowded Lack of General Acute Care Beds Staff Shortages Lack of Specialty Physician Coverage Lack of Psychiatric Beds Source: AHA 2006 Survey of Hospital Leaders

18. For urban hospitals reporting diversion, nearly one in six was on diversion more than 20 percent of the time. Chart 7: Percent of Time on Diversion in January 2006 (Among Urban Hospitals Experiencing Diversion in the Last 12 Months) Percent of Timeon Diversion Percent of Urban Hospitals Experiencing Diversion Source: AHA 2006 Survey of Hospital Leaders

19. 45 percent of hospitals reported a moderate to significant increase in having to “board” behavioral health patients in the ED. Chart 8: Percent of Hospitals Reporting Increases in “Boarding” Behavioral Health Patients in the ED by Type of Hospital 53% 37% 49% 44% 45% Source: AHA 2006 Survey of Hospital Leaders Note: Boarding is a term used when patients that are in need of inpatient psychiatric or substance abuse services remain in the emergency department until a suitable placement can be found.

20. 42 percent of community hospitals experienced gaps in specialty coverage in the ED. Chart 9: Percent of Hospitals Losing Specialty Coverage for Any Period of Time in Last 24 Months and Number One Reason Cited Percent of Above Citing Reason as Number One Factor Source: AHA 2006 Survey of Hospital Leaders

21. More than one-third of hospitals now pay some physicians for specialty coverage. Chart 10: Frequency of Paying for Specialty Coverage in Emergency Department Pay for Coverage in All Specialty Areas Pay for Coverage in Most Specialty Areas Pay for Coverage in Some Specialty Areas Never Pay for Specialty Coverage Source: AHA 2006 Survey of Hospital Leaders

22. Paying for specialty coverage has become more common over last few years. Chart 11: When Hospital Began Paying for Specialty Coverage (of those hospitals that reported payment for coverage) Within Past Year More Than 2 Years Ago 1-2 Years Ago Source: AHA 2006 Survey of Hospital Leaders

23. Survey ResultsMEDICAL LIABILITY

24. The majority of hospitals in crisis states face double-digit increases in costs for medical liability coverage. Chart 12: Percent of Hospitals in Crisis States* by Rate of Growth in Medical Liability Expense over Past Two Years Increase of Double or More 5% 50 to 99.9% Increase 14% Less than 10% Increase 46% 10-49.9% Increase 34% Source: AHA 2006 Survey of Hospital Leaders *Crisis states as identified by the American Medical Association as of January 2006 include: PA, WV, NV, MS, WA, OR, AR, MO, GA, FL, IL, NC, KY, OH, NY, CT, NJ, WY, RI, TN and MA.

25. The medical liability crisis is affecting hospitals and the patients they serve. Chart 13: Percent of Hospitals in Crisis States* Reporting Specific Effects of Increased Professional Liability Expenses Source: AHA 2006 Survey of Hospital Leaders *Crisis states as identified by the American Medical Association as of January 2006 include: PA, WV, NV, MS, WA, OR, AR, MO, GA, FL, IL, NC, KY, OH, NY, CT, NJ, WY, RI, TN and MA.

26. The service most affected is obstetrics. Chart 14: Percent of Hospitals in Crisis States* Reporting Negative Impact on Ability to Provide Specific Services Source: AHA 2006 Survey of Hospital Leaders *Crisis states as identified by the American Medical Association as of January 2006 include: PA, WV, NV, MS, WA, OR, AR, MO, GA, FL, IL, NC, KY, OH, NY, CT, NJ, WY, RI, TN and MA.

27. Hospitals are also taking on additional risk. Chart 15: Percent of Hospitals in Crisis States* Reporting Taking on Additional Risk Source: AHA 2006 Survey of Hospital Leaders *Crisis states as identified by the American Medical Association as of January 2006 include: PA, WV, NV, MS, WA, OR, AR, MO, GA, FL, IL, NC, KY, OH, NY, CT, NJ, WY, RI, TN and MA.

28. Survey ResultsHEALTH CARE COSTS

29. Hospitals face significant increases in the costs of pharmaceuticals and medical supplies. Chart 16: Percent Change in Hospital Expenses for Pharmaceuticalsand Medical Supplies/Devices, 2004 to 2005 Source: AHA 2006 Survey of Hospital Leaders

30. Survey ResultsDISASTER READINESS

31. The majority of hospitals reported taking part in a large-scale drill with external response agencies. Chart 17: Hospitals Participating in Large-scale Community-wide Drills with External Response Agencies in 2005 Yes, have already taken action No, but plan to take action in 6-12 months No, but plan to take action when resources permit No action planned Source: AHA 2006 Survey of Hospital Leaders

32. 80 percent of hospitals have established back up systems for communication with police, fire etc. Chart 18: Percent of Hospitals Establishing Back-up Community-wide Communications Ability in 2005 Yes, have already taken action No, but plan to take action in 6-12 months No, but plan to take action when resources permit No action planned Source: AHA 2006 Survey of Hospital Leaders

33. 84 percent of hospitals have a formal or informal relationship with other hospitals for sharing resources. Chart 19: Percent of Hospitals Reporting Relationships With Other Hospitals for Sharing Resources in 2005 Source: 2006 AHA Survey of Hospital Leaders

34. 93 percent of hospitals have received federal or state assistance for disaster preparedness and planning. Chart 20: Percent of Hospitals That Received Assistance (Financial or In-Kind) for Disaster Preparedness and Planning in 2005 Source: 2006 AHA Survey of Hospital Leaders

35. Hospitals vary in their ability to provide staffed beds in the event of a disaster. Chart 21: Percent of Hospitals Reporting NO Capacity to Provide Additional Staffed Beds in the Event of a Disaster Chart 22: Average Number of Staffed Beds Hospitals With Surge Capacity Estimate Could Be Available in the Following Time Periods 28-29 beds 22-23 beds 14-15 beds Time Period Time Period Source: 2006 AHA Survey of Hospital Leaders