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March 26, 2007 12:00 AM

Weighing the cost of a pandemic

Jennifer Lubell
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    A major flu pandemic could increase revenue for the healthcare industry, but would be very costly for hospitals to prepare for, a new report from the Trust for America’s Health concluded.

    While other industries may founder, a pandemic might actually increase the gross domestic product for the healthcare industry, according to the report, Pandemic Flu and the Potential for U.S. Economic Recession. The Congressional Budget Office estimates there would be a 15% revenue increase for the healthcare sector over a three-month period, according to the report from the Trust for America’s Health, a nonpartisan healthcare advocacy group.

    On a wide scale, “An outbreak could potentially lead to greater revenue for hospitals due to an increase in hospitalizations,” the report found. Companies that produce medical supplies and equipment could also see revenue rise as the result of an increase in demand for masks, vaccines and ventilators.

    Preparing for an influenza pandemic, however, could lead to financial hardship for many hospitals, costing $5 billion in aggregate for the 5,000 general hospitals across the country, according to the report. “These additional costs could strain an already troubled industry,” the report stated, estimating that the preparation costs could average $1 million per hospital. Thirty percent of hospitals are already losing money, and many do not have more than a few weeks of cash on hand, the advocacy group reported.

    “The U.S. is not prepared to face an economic shock of this magnitude,” said Jeff Levi, executive director of the group. “While important government preparedness efforts focusing mainly on medical and public health strategies are under way, efforts to prepare for the possible economic ramifications have been seriously inadequate. Stepping up pandemic preparedness planning is vital to our national and economic security.”

    Everyone’s suffering from “bird flu fatigue” right now, but the threat of a pandemic is very real, Levi said during a teleconference to release the findings. Using a “worst-case scenario” model based on the 1918 pandemic, the report estimates that 90 million Americans could become ill and 2 million could die in the event of a severe outbreak.

    Hospitals in the event of a pandemic “would be overrun,” and routine services such as doctor’s visits would likely be cut back, said Misha Segal, a Trust for America’s Health consultant and lead author of the report. An earlier study issued by the group in December 2006 found that half the states would run out of hospital beds within two weeks of a moderately severe pandemic flu outbreak (Dec. 18/25, 2006, p. 7).

    What HHS should do is establish an emergency health benefit that would go into effect in the event of a pandemic, Levi said. Such a benefit would cover uninsured and underinsured individuals and give them early access to antiviral medication, he said.

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