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Hospitals promote economic role amid talk of federal cuts

A report citing the number of jobs created by hospitals is offered, as debate takes place over possible reductions in Medicare pay to those institutions.

By — Posted Feb. 13, 2013

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As Congress debates ways to cut health care spending, the American Hospital Assn. wants to remind it of the contributions the health care industry, particularly hospitals, makes to the economy and how any threat to the access of health services would have a negative impact on the nation’s financial stability.

In a report issued in January, the AHA said the importance of hospitals extends far beyond health care. Hospitals are job creators, the organization said, employing nearly 5.5 million people and generating $2 trillion in annual economic activity, according to the AHA (link).

“The economic contribution of hospitals … is often critical to communities,” the AHA said in a statement.

The report said that even during a slow economy, health care continued to add jobs. In 2012, an average of 28,000 jobs per month were added, and the “ripple effect” of hospitals helped support 9.9 million jobs outside of health care, according to the report.

The AHA also said its members have provided a stable base for physicians who are struggling to adapt to a changing health system. Caroline Steinberg, vice president of trends analysis for the AHA, said she heard from many AHA members that physicians were coming to them, asking to be purchased because of a decline in patient volume, rising expenses and the uncertainty of Medicare.

More physicians in employed positions

From 2008 to 2011, the number of employed physicians, dentists, residents and interns at community hospitals grew from 199,289 to 225,771, according to AHA data. Studies have shown a majority of physicians could be in employed situations instead of independent practice by the end of 2013.

Some of the issues the AHA is concerned about include a proposed payment cap on nonemergency evaluation and management services provided at hospitals that would equal what is paid to physicians in private offices. The move would reduce Medicare spending by $1 billion a year. The AHA says hospitals already lose money treating Medicare patients in hospital outpatient departments. The proposed cap would mean a pay reduction of between 65% and 80% for 10 of the most common outpatient hospital services, the organization said.

Hospitals already took a $10.5 billion reduction in Medicare pay as a result of the sustainable growth rate patch that Congress put in place Jan. 1. That legislative action postponed until the end of 2013 a 26.5% cut to doctors’ pay rates mandated by the sustainable growth rate formula.

“Congress should not overlook the economic contribution of hospitals as it considers further deficit reduction proposals,” said AHA President and CEO Rich Umbdenstock, in a statement.

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