States Report Healthcare Layoffs, Reductions Due to Federal Cuts

Industry experts have warned about healthcare layoffs, often considered a recession-proof field. Now some data exists as to what has happened in Pennsylvania and Missouri, and experts in those states weigh in on what must change to prevent more cuts in employment and services.

The Hospital & Healthsystem Association of Pennsylvania (HAP), in conjunction with the Pennsylvania Department of Labor and Industry, surveyed hospitals in the state and found they had shed 3,900 jobs in the past year, from February 2013 until February 2014. HAP’s survey of general acute care hospitals indicated 67 percent of hospitals have already frozen hiring or plan to do so. Forty-nine percent plan to lay off current staff, 51 percent plan to delay needed renovation or building projects, and 41 percent anticipate cutting healthcare services.

“A lot of what we are seeing can be related to the decrease in patient utilization that resulted from the Great Recession and the lackadaisical recovery,” said Martin Ciccocioppo, vice president of research at HAP. “We also can point to quality. Readmission rates are down, and we are doing a better job caring for people in the ambulatory setting.”

Ciccocioppo attributes the recessionary effect to patients losing health coverage when they lost their jobs. Therefore, they delay elective care.

In 2008, Pennsylvania hospitals discharged 1.725 million patients. That fell to 1.545 million patient discharges in 2013.

“We are still not seeing a bounce-back,” Ciccocioppo said.

In addition, like all U.S. hospitals, Pennsylvania’s acute care facilities must deal with the sequestration cuts and changes under the Affordable Care Act (ACA). From 2013 through the end of 2014, Pennsylvania hospitals will have had their Medicare payments cut by approximately $800 million; over the next decade, they are expected to lose nearly $10 billion.

The Medicare-Dependent Small Rural Hospital program and Low-Volume Hospital Adjustment, considered by HAP to be crucial to the fiscal viability of Pennsylvania’s rural hospitals, expired on March 31, 2014. Also, Pennsylvania has not expanded Medicaid, under the ACA, instead proposing a different system to cover low-income uninsured.

Ciccocioppo said HAP supports the governor’s plan. However, if approved by the Centers for Medicare & Medicaid Services (CMS), it will not start until January 2015.

The Missouri Hospital Association (MHA), in collaboration with the Missouri Chamber of Commerce, surveyed the state’s hospitals and found 998 full-time equivalent positions were lost during the last six months, 2,145 positions are either currently or prospectively affected by a hiring freeze and $100 million worth of building improvement projects have been delayed or cancelled. The association said the reductions are in response to federal funding cuts, high uncompensated care costs and changing utilization patterns.

Dave Dillon reported that the Missouri Hospital Association is working with the state’s chamber of commerce to make a business case for expanding Medicaid.

“We wanted to validate our estimates of what hospitals are expected to do in the uncertain environment we are in,” said Dave Dillon, vice president of MHA.

Dillon explained that proponents of the ACA anticipated coverage would lead to less uncompensated care and more revenue for hospitals, which would offset federal cuts to Medicare and disproportionate share hospitals--but that did not happen, particularly in states that did not expand Medicaid.

MHA has worked with the state chamber of commerce to educate people and legislators about the business case for expanding Medicaid. Missouri hospitals provide more than $1 billion in uncompensated care annually. High levels of uncompensated care lead to more cost shifting to commercial payers.

“We have pursued this in ways other states haven’t,” Dillon said. “We understood we have to speak the right language to make this work. It’s not popular, but it’s the right thing to do.”

Providing a nationwide perspective, the outplacement consulting firm Challenger, Gray & Christmas, based in Chicago, reported the healthcare sector announced 52,638 job cuts in 2013, which is 45 percent more than the 36,212 a year earlier. It attributes the cuts to reductions in Medicare reimbursements and Medicaid funding, forcing hospitals and other healthcare providers to adjust staffing levels.

In March 2014, healthcare layoffs ranked first on the firm’s job cut report, with 5,768 job losses in March 2014 and a year-to-date total of 10,984.

However, the firm anticipates healthcare will rebound, saying, “Healthcare workers remain highly sought-after.”

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