The recession may be easing up, but hospitals still feel the strain, especially when it comes to bad debt.

In November, the Healthcare Financial Management Association reported that a survey of hospitals showed one in five had a 10 percent or greater increase in bad debt write-offs compared with the prior fiscal year.

Industry officials and observers blame corporate layoffs and the accompanying loss of health coverage, as well as employers pushing more costs onto their workers. Legislation to extend the COBRA subsidy will not solve the underlying problems, they say.

"About 97 percent of hospitals have seen an increase in self-pay accounts," says Rick Gundling, vice president of HFMA. "Those are the costs that are more at risk of becoming bad debt."

So what's a hospital to do? Jason Sussman, a partner with Kaufman Hall, says hospitals must be proactive in dealing with struggling patients.

"A lot of hospitals have stepped up programs to help individuals who no longer have health insurance and no longer have income to find sources of payment, even partial payment, for health care bills," he says.

But it's tougher to find special programs for insured patients who need financial help, he adds. Some hospitals offer low-dollar payment plans up front. Meeting such challenges requires a high level of staff expertise and sophisticated information technology.

Providers facing higher debt levels also must ramp up efforts to control costs and enhance revenues, Sussman says.