Are Hospitals Due for Another Round of Layoffs?

Bill Woodson, a senior vice president at Sg2, the healthcare intelligence company, says it's important to look at the big picture. After all, the hospital sector employs about 4.7 million people.

"I'd be careful about leaping to conclusions, and I would still offer the conventional wisdom that each market is a different story," Woodson says. "In numbers terms, these layoffs are still very small percentages of the workforce. In a lot of places there have been a lot of thought and work done all year to trim wherever possible to avoid touching headcounts. Organizations have learned through the years that the cultural challenges layoffs create for them that are very hard to overcome. And they also know how in short supply the talent is."

He says more layoffs may be announced in the coming weeks as hospitals and health systems struggle to make their margins at the close of the fiscal year on June 30. "This is in a scheme of a workforce with several thousands people. If we are talking 70 or 80 people, sure it will hurt, but it's not an overwhelming number," he says. "These institutions are historically very well managed and take a very hard look at their long-term horizons."

There is some good news. The overall healthcare sector—physicians' offices, residential mental health homes, ambulatory services—reported 23,500 payroll additions in May. That's a slight increase in the average monthly gain since January but well off the average gain of 30,000 payroll additions per month in 2008. Ambulatory healthcare continued to see the fastest payroll additions in the overall healthcare sector, with 17,600 payroll additions in May, and 72,000 payroll additions since Jan. 1.

Even with the slowing payroll additions, the hospital and healthcare sectors are still outperforming the overall economy. BLS reports that nonfarm payroll employment fell by 345,000 as the nation's unemployment rate rose from 8.9% to 9.4%.

So, at this point, halfway through a very difficult year, at least we can still say that the healthcare sector is a growth industry, even if it's not at the pace to which we've been accustomed.