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Las Vegas' University Medical Center is among the facilities that have been hit hard by the area's economic collapse.
Las Vegas' University Medical Center is among the facilities that have been hit hard by the area's economic collapse.

Healthcare Market Profile: Las Vegas-Paradise

Not so lucky: Economic free-fall in Nevada's Clark County has hit healthcare hard


By Joseph Conn
Posted: July 25, 2011 - 12:01 am ET
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Up until the mortgage and banking industry collapse, the one constant in the history of Las Vegas had been exponential growth.

Incorporated in 1911, Las Vegas began as a railroad stop, grew by 188% during its first decade to a population of 2,304 in 1920, and the booms just kept coming—both figuratively and literally. Growth spurts in the city and surrounding Clark County were powered by construction of nearby Hoover Dam in the 1930s, and the establishment of mob-linked gambling casinos in the 1940s and '50s, the latter being simultaneously accompanied by an influx of homesteading scientists whose day jobs had them developing and blowing up atomic bombs in the nearby desert.

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More recently, growth in and around Las Vegas was been spurred a frenetic competition among builders of lavish, mega-casinos along the fabulous and infamous “Strip.”

Las Vegas, now with about 584,000 people according to 2010 census, can boast that it is the most populous U.S. city founded in the 20th century, as well as the fastest-growing (35%) between 2000 and 2010. Clark County, which also includes Nevada's second-largest city, Henderson (population 257,729), has grown just as explosively, to nearly 2 million people by 2010, up from an estimated 369,500 in 1976, according to census estimates.

But all of that explosive growth is history. The Las Vegas metropolitan area is at the epicenter of the home foreclosure crisis, the second worst, next to Detroit, of the 20 major U.S. real estate markets analyzed by the Standard & Poor's/Case Shiller Home Price Indices, according to April data. The collapse of the Las Vegas-area housing market took with it the region's job market and inverted the population curve, dragging down much of the healthcare sector with it, according to Bill Welch, president and CEO of Nevada Hospital Association.

Welch has watched the local healthcare industry go into free fall, almost as if, figuratively speaking, it was riding in one of those gleaming brass and glass elevators going up the side of a fabulous Las Vegas casino hotels, and someone pried open the doors and cut the cable.

“Up until 2 years ago, we weren't experiencing the crunch that other parts of the country were experiencing,” Walsh says. “But by mid-2008, we got hit with it. Then, people just started moving out. The bulk of that was in Clark County. There are thousands of houses sitting empty in Clark County.”

“Now, we have 69% of folks who present at our hospitals are not paying the cost of healthcare,” Welch says. “They're either uninsured or are paid by Medicaid. In Nevada, was have 33 short-term, acute-care hospitals and 20 of those 33 hospitals are losing money and have been losing money for the last two years.”

Fifteen hospitals are in Las Vegas or its Clark County suburbs, Welch says. “Of those hospitals, I would say 11 of them are losing money.” And of the four remaining, only a couple, which built in the more affluent Clark County suburbs “are doing well,” he says. Fortunately, most of weaker hospitals are affiliated with a profitable hospital to help buoy them, Welch says. A key exception, he says, is county-owned, 542-bed University Medical Center, Clark County's only public hospital and home to the state's only Tier 1 trauma center.

“That hospital is struggling to the point where they don't know whether they will stay open,” Welch says. “If UMC closes, that will be a dark, dark day in that community. That would push the significant catastrophic cases elsewhere in the community or out of the community altogether.”

Danita Cohen, director of public relations at UMC, says the hospital provides about $250 million in uncompensated care every year. Some of those costs are passed on to other payers, but about $70 million is made up in the form of a subsidy from Clark County.

“In this sort of economy, when people are out of work, they don't have insurance, which means they're not taking proper care of themselves, they're not being seen by a doctor, and once they are seen, they are sicker than they would have been and show up in the emergency room,” Cohen says.

She didn't take issue with Welch's grim assessment. “That is our financial situation,” she says. “We do receive that subsidy.”

As hospitals across the country invest in electronic health-record systems and are gearing up to qualifying for millions of dollars in federal EHR incentive payments, the health information technology program at UMC is “still a work in progress because of our financial situation,” Cohen says.

Hospitals aren't alone in feeling financial pressure, Welch adds. “Because of this payer mix, we have oncology specialists who cannot support their practices anymore. They're working out of state to subsidize their practices here.”


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