ELKRIDGE, MD – Hospitals across the eastern half of the United States are feeling the pain of recession, and in some cases are seeing margins fall to unprecedented lows.

Maryland hospitals’ total margins, for instance, dropped by 16 percent to -13.5 percent between Oct. 1 and Dec. 31, 2008, compared to 2.2 percent during the same time in 2007.

Carmela Coyle, president and CEO of the Maryland Hospital Association, said the poor economy is forcing many people to turn to emergency rooms as their only source of care, but it’s also crippling hospitals’ ability to meet growing demand.

“Hospitals have significantly less money to hire new staff, invest in new services and programs or technology, to upgrade buildings, or to help physicians,” Coyle said.

She noted that Maryland hospitals’ total margins had already fallen to a -2.5 percent in the quarter ending Sept. 30, 2008, and said the situation in Maryland is far worse than for hospitals nationwide, where the deficit for total margins was  -7.8 percent for the final three months of 2008.

Most hospital losses in Maryland resulted from increases in interest rates, losses on returns and other increases in costs needed to provide financing to upgrade or expand programs and to underwrite the costs of new technology.

Coyle said 34 Maryland hospitals sustained overall losses during the last three months of 2008 totaling $466 million.

Hospitals in other states were also hit with steep losses in the value of their assets this year. For example, Connecticut hospitals experienced huge pension fund losses and other net asset losses in 2008 – totaling $330 million.

The statewide total margin for Connecticut hospitals dropped to -1.1 percent in 2008, a $404 million year-over-year drop. The loss was due directly to a decline in non-operating income.

Jennifer Jackson, CEO of the Connecticut Hospital Association, said these losses mean that hospitals’ ability to borrow funds for critically needed projects is severely impaired.

The federal stimulus package came at exactly the right time, she said, as it contains sufficient funds to allow Connecticut to maintain current Medicaid eligibility and cover growing demand as well as bring provider rates closer to the cost of providing care and contribute to closing the state budget deficit.

“Now that President Obama has signed the stimulus package into law, we’re urging (Connecticut) Governor Rell and the Legislature to use the Medicaid stimulus funding to help the people who need it and to support those who provide that help,” said Jackson.