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Economic pressures prompt increase in hospital mass layoffs

The American Hospital Assn. says a 2% cut in the Medicare program would lead to the elimination of 195,000 jobs by 2021.

By — Posted Sept. 29, 2011

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An economy that continues to struggle, combined with payment cuts by state governments looking to balance their budgets, led to increases in hospital mass layoffs, analysts said.

"Hospitals are under some pretty tremendous economic pressures," said Cassie Sauer, spokeswoman for the Washington State Hospital Assn. "They are very much impacted by people losing their jobs and the high rate of unemployment because people don't have health insurance. People who used to be able to pay for their care can't pay for their care any longer. The level of uncompensated care -- either charity care or bad debt -- has gone up pretty dramatically."

Thirteen mass layoffs occurred at hospitals in August, leading 1,085 people to claim unemployment benefits, according to the U.S. Bureau of Labor Statistics monthly report issued Sept. 22. The BLS recorded 10 incidents in July with at least 622 people losing jobs. In August 2010, the BLS reported 12 mass layoffs, with 1,027 lost positions (link).

If the pace continues, hospitals will have 127 mass layoffs for 2011 involving at least 8,257 people. That would make it the third-highest year in the past 10 for the number of incidents and the fifth for the number of people affected.

Mass layoffs are defined as at least 50 people losing their jobs at one company. The BLS does not list the occupations being cut. Analysts have said administrative and support staff tend to be most affected. Physicians and clinical staff are less likely to lose their jobs.

Financial analysts have issued gloomy predictions for hospitals, and industry advocates project that layoffs will increase if additional cuts are made to Medicare.

Moody's Investors Service issued an annual report Aug. 30 showing dismal fiscal prospects for nonprofit hospitals. In addition, the American Hospital Assn. published a report Sept. 9 stating that if the Medicare program was cut by 2%, hospitals would lose $41 billion from 2013 to 2021. This would lead to 92,866 jobs lost in 2013. By 2021, 194,522 jobs would be eliminated.

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