A bulwark of employment during the Great Recession, the healthcare industry has started to lay off thousands of workers as hospital revenues decline with fewer inpatient visits and lowering insurance payments.
Although total private hospital employment still rose by 36,000 during the past year, some 8,000 jobs were lost from a high point in April, including slots for doctors, nurses, and administration staff members. However, the relative downturn in the industry may prove temporary as the Affordable Care Act eventually begins to provide health coverage to as many as 30 million of the 46 million or so who presently lack insurance.
"While the rest of the U.S. economy is stabilizing or improving, healthcare is entering into a recession," John Howser, assistant vice chancellor of Vanderbilt University Medical Center, told USA Today.
Private companies in the U.S. healthcare industry announced more than 8,000 layoffs last month, more than any other industry, for a total this year of more than 41,000 layoffs — offset by job gains elsewhere within the industry, but still indicating a bit of volatility.
This month, Indiana University Health cut 900 jobs as part of an effort to save $1 billion over five years, while Vanderbilt University’s health system in Nashville plans to cut 1,000 jobs by the end of the year, aiming for an eight percent budget reduction. The Cleveland Clinic, too, has offered to buy out 3,000 employees to cut budget costs by $330 million.
“This is a challenging time for the healthcare industry,” Jim Terwilliger, president of two hospitals within Indiana University’s health system, told USA Today. “The pace of change is far greater than any time in recent history.”
Among pressures on the industry, the Affordable Care Act — known as Obamacare — has mandated reductions in Medicare payments to hospitals that provide lower-quality service or report high readmission rates. In an effort to save federal healthcare money, the law penalizes hospitals for readmissions of patients within 30 days of discharge — hoping to improve management of “super-utilizers,” the one percent of American health care consumers who drain 21 percent of U.S. healthcare expenditures.
And as a direct result of federal budget sequestration, the U.S. National Institutes of Health (NIH) has been forced to cut funding to hospitals by five percent, sending researchers scattering to find new work. Aside from budgetary politics, the economic downturn itself has lowered rates of healthcare consumption by four percent since the downturn began in 2007.
Moreover, large numbers of baby boomers aging into the Medicare system translate to lower insurance reimbursements to hospitals, as consumers switch from private work-based insurers — in many but not all cases — to Medicare.
Despite the volatility, however, health care as an industry is expected to grow as millions of more Americans gain health insurance in the coming year or so, experts say.
At least one conservative blogger, among many, took the industry news as opportunity to criticize Obamacare. “The combination of more customers, customers requiring more treatment, and less ability to serve customers due to inadequate reimbursements means that more Americans will experience longer waits for treatments and more aggressive attempts to talk them out of receiving those treatments,” wrote Tom Blumer, of MythBusters.
Blumer and other conservative commentators believe present employment volatility within the industry foreshadows a “rationing” of health care for the American consumer — a form of rationing spread more equally among insured consumers. But regardless of the distribution of health and wealth in the United States, NIH budget cuts continue to hamper medical research for everyone.
Since March, sequestration cuts to NIH has trimmed five percent of funding across all projects, affecting every area of federal medical research.