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Hospital Layoffs Creep Back into the Headlines

By John Commins  
   March 22, 2010

It seems like hospital layoffs are creeping back into the news:

The fact is they never went away.

Bureau of Labor Statistics data show that there were 152 mass layoffs—defined as 50 job losses or more—at nongovernmental hospitals in 2009, resulting in more than 13,000 job cuts, up from 112 mass layoffs with more than 12,800 job cuts in 2008, which was the first full year of the recession that started in December 2007.

By comparison, 67 hospital mass layoffs occurred in 2007, with about 8,200 job cuts, and 57 mass layoffs with 3,300 job cuts in 2006. The number of mass layoffs could actually be higher because BLS doesn’t track layoffs affecting fewer than 50 jobs or layoffs at government-owned hospitals.

"I would definitely say levels have been high in the recent past but it is hard to tell what is going to happen this year, and I don’t know what the common denominator is. We only have a couple of data points to look at," says BLS economist Patrick Carey.

David Cherner, a principal at Health Workforce Solutions LLC, in San Francisco, says the layoffs are the result of the continued severe financial pressures facing acute care hospitals. "Medicare and Medicaid reimbursements are being reduced, in some cases there are reductions in patient volumes, economic unease, and this is just continuing the trend from the last 18 months or so," Cherner says. "That coupled with the uncertainty around healthcare reform has made folks continue to focus on cost cutting."

The Seton Family of Hospitals, a safety net health system for Central Texas, announced last week that it was eliminating about 150 positions, approximately half of which were staffed, even as the health system sees increasing demand for services.

"Like the rest of the industry, there are a lot of different forces at play in Central Texas," Seton Family spokeswoman Adrienne Lallo says. "The economy is in the doldrums. The number of patients who have employer-based healthcare has been ratcheting down. There are fewer people who come in fully covered. The numbers of people who come into the hospital who are either underinsured or have no insurance at all are going up, and the number of people who have no ability to pay are going up."

Even with the financial pressures at Seton Family, Lallo says many of the affected employees can be shifted to other jobs within the health system, leaving only the employees with nontransferable skills out of the relocation. The layoffs, she says, are more about "reorganizing to gain efficiencies."

John Commins is a senior editor at HealthLeaders.

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