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Are Hospitals Due for Another Round of Layoffs?

John Commins, for HealthLeaders Media, June 8, 2009

For the last six months or so I've tried to keep track of hospital layoffs across the country. Nothing fancy, exhaustive, or scientific: I'd Google "hospital" and "layoffs" and "2009" and see what popped up.

Unfortunately, there was no shortage of hospital layoffs news in January, February, and March. In the last two months or so, however, layoffs slowed down to the point where I hadn't done a daily search for a month or so. While it was apparent that the hospital industry was now susceptible to the same financial woes that had knee-capped the economy-at-large, I was hopeful that the worst had passed.

That wishful thinking was doused by three buckets full of cold reality last Tuesday afternoon with the back-to-back-to-back announcements of layoffs at three well-established hospitals and health systems in three very different parts of the country.

  • Greenwich (CT) Hospital announced more than 70 layoffs as part of an effort to slash about $20 million from next year's budget.
  • The University of Iowa Hospitals announced that it would trim its 6,600-person workforce. The 680-bed hospital in Iowa City, with an operating budget of $860 million, had already trimmed $23 million but must cut another $45 million by June 30, 2010 to have a 1% profit margin. Hospital officials have yet to determine how many jobs will be cut.
  • The University of Alabama Birmingham Health System, UAB Hospital, and UAB Highlands said they would eliminate 245 positions overall, but hire back 81 staff whose positions are now held by non-UAB contract staff, for a net elimination of 164 jobs.

The sad refrain from leadership at all three hospitals was off the same sheet. They blamed declining patient volumes, a drop in elective procedures, sagging investment portfolios, increases in uninsured patients that come with the newly jobless, and anticipated reduced reimbursements from private insurers and the federal government.

Last week, the Bureau of Labor Statistics reported that hospital job growth is essentially flat this year. The nation's 5,708 or so hospitals added 300 new jobs in May. By comparison, the hospital sector added 16,800 jobs in May 2008, and 8,700 jobs in May 2007. In the first five months of 2009, the nation's hospitals increased payroll by 8,600 jobs, compared with 43,700 jobs in the first four months of 2008, and 25,300 jobs for the same period in 2007.

The May numbers are particularly disheartening because, historically, hospital hiring has up-ticked in the second quarter of each year, as hospitals get a better idea of their patient volume projections and they look to graduating nurses and other clinicians to fill jobs.

Do these numbers suggest we're on the cusp of another round of layoffs in the hospital sector?

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