Additionally, the duration of unemployment has grown since the beginning of the recession. Back in 2007, it took job seekers an average of 15 weeks to find a job, whereas it now takes nearly 40 weeks, according to the BLS report. To compound matters, COBRA and unemployment benefits—which were extended for some for up to two years—are starting to peter out.
“When you look at the job loss, the numbers are so high. That relates to the ability to fuel the economy with purchases or to get healthcare,” says James Dregney, CPA, CFO at Lakewood Health System in rural Staples, MN. Minnesota’s employment rate is 2% lower than the national average, but the state’s average duration of unemployment is still 40 weeks.
The jobs picture varies regionally based on industries and the local demographics. “We’re losing population in our area, and our market is shrinking,” says Mary Ann Freas, senior vice president and CFO at the 354-bed Southwest General Health Center in Middleburg Heights, OH, a suburb of Cleveland. “We’re not counting on growth to take [our hospital] anywhere. Our balance sheets are very strong, but at some point that’s at the sacrifice of some really big investments that we need to make.”
As unemployment benefits run out and money gets tighter, it makes sense that people are deferring healthcare treatment for as long as possible. So for CFOs in the throes of financial forecasting, you may want to heed the actions of several of your peers I spoke with at HealthLeaders Media’s CFO Exchange three weeks ago. Create a five- and 10-year financial forecast, and then overlay worst-case scenario projections.