Many health care analysts predict the lagging U.S. economy may drive employers to further shift health costs to workers in 2008. Consumers struggling to make mortgage payments and pay high gasoline and food bills could find it particularly difficult to afford health insurance which would increase the number of uninsured patients in hospitals and drive up bad debt.

Several hospital operators already reported soft admission growth in the fourth quarter of 2007, news that arrived at a bad time for those attempting a turnaround including Tenet Healthcare Corp., Health Management Associates Inc. and Lifepoint Hospitals Inc., says Ken Weakley, an analyst at Credit Suisse.

At Lehman Brothers, analyst Adam Feinstein predicts bad debt and charity care expenses for the for-profit hospital industry will rise 15% to 17% this year. The industrys total bad debt, he predicts, will reach $14.6 billion in 2008 compared with $12.4 billion in 2007. The highest expenses, he says, will occur in the latter half of the year.

Bad debt is incurred from treating uninsured or underinsured patients.

We dont see an opportunity for the fundamentals to improve in the coming year, said Feinstein, in a note to investors. The uninsured ranks continue to increase, manifesting itself in higher bad debt expense and lower operating margins.

Despite the negative forecasts, Feinstein adds, there are some industry pockets that could perform well this year, including surgery and rehabilitation centers. Lehman Brothers began predicting bad debt expense for the hospital industry in January 2006. It found that bad debt expense is closely related to hospital prices, patients real disposable income, continued claims and personal savings.