Hospital mass layoffs hit new high in 2009

The number of workers affected by layoffs of 50 or more people also was high in ambulatory health services settings.

By Victoria Stagg Elliott — Posted Feb. 8, 2010

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Hospitals in 2009 experienced the greatest number of mass layoffs since the Bureau of Labor Statistics started tracking those numbers in 1996, according to a report the Dept. of Labor agency issued Jan. 27.

"The economic downturn has continued to impact many hospitals nationwide," said Matt Fenwick, American Hospital Assn. spokesman. "Hospitals may be particularly vulnerable now because the effect on the health care system can be lagged."

A mass layoff is defined as 50 people losing their jobs from a single employer. Hospitals had 152 such incidents in 2009, leading 11,787 to claim unemployment benefits. The year 2008 was the second-highest on record, with 112 mass layoffs involving 9,268 people. But the number of people who lost their jobs in the health care sector in 2009 fell short of 2005's record of 13,282, a number exacerbated by layoffs from facilities that were damaged by Hurricane Katrina.

The monthly totals declined near the end of 2009, with seven mass layoffs apiece in both November and December, the only months in which there were not more than 10 mass layoffs. However, the decline may be due to seasonal variation, according to the bureau.

According to an American Hospital Assn. survey released Nov. 11, 2009, 51% of the 768 CEO respondents reduced staff in response to economic pressures. In addition, 84% cut administrative expenses, and 20% reduced services. Other surveys have found hospitals' bottom lines improving in 2009 thanks to the cutbacks, as well as improved investment markets.

The impact of the economic downturn also is being reflected in surveys at the state level. According to one by the New Jersey Hospital Assn. released Jan. 13, 43% of member institutions laid off employees and 28% eliminated vacant positions. Approximately 82% were experiencing an increase in charity care patients, and all experienced declines in donations to support this work.

"Hospitals are not recession-proof," said NJHA President and CEO Betsy Ryan. "They face the same burdens and fiscal pressures as any other industry when the economy sours. But patients need health care services -- recession or not -- and they continue to turn to hospitals. This combined burden places tremendous pressures on hospitals. For many of them, cost-cutting measures such as layoffs are unavoidable."

Ambulatory health care services, a category that includes physician offices, also were hit by the recession. A total of 85 mass layoffs occurred in 2009, the second-highest total since the numbers were first tracked in 1996. The 2009 layoffs led to 6,630 workers claiming unemployment, the most ever recorded by the BLS in the ambulatory health care services category.

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