How jobs bill af­fects health­care

De­spite growth, in­dus­try feel­ing the strain

Modern Healthcare - - Front Page - Melanie Evans

Health­care, long a re­silient cor­ner of the U.S. la­bor mar­ket, is show­ing signs of eco­nomic strain. Health­care—and its heavy­weight sec­tor, hos­pi­tals—con­tin­ued to hire dur­ing and af­ter the re­ces­sion even as the na­tion’s econ­omy jet­ti­soned mil­lions of jobs and then failed to add enough to in­still con­fi­dence in the re­cov­ery. But be­yond the wel­come job growth are in­di­ca­tions of health­care’s vul­ner­a­bil­ity to the econ­omy. And as pol­i­cy­mak­ers seek to pare down the fed­eral deficit, the slow­down to hos­pi­tal rev­enue, blamed on the econ­omy and prior cuts to pub­lic health­care spend­ing, is ex­pected to worsen.

Pres­i­dent Barack Obama de­liv­ered a speech to Congress last week that high­lighted the grav­ity of the na­tion’s jobs out­look and sig­naled the ad­min­is­tra­tion is look­ing for deeper Medi­care and Med­i­caid cuts to off­set the costs of a jobs bill and deficit re­duc­tion.

Hos­pi­tals, fear­ful Congress will opt for Medi­care cuts to help re­duce the deficit, moved to cap­i­tal­ize last week on the sec­tor’s job growth and cur­rent anx­i­ety over a dou­ble-dip re­ces­sion. “Now is not the time for Congress to make cuts to a sec­tor that is driv­ing eco­nomic growth and cre­at­ing jobs,” Amer­i­can Hos­pi­tal As­so­ci­a­tion Pres­i­dent and CEO Richard Umb­den­stock said in a writ­ten state­ment. The trade group re­leased a re­port com­mis­sioned by the AHA that pro­jected hos­pi­tals would cut 194,000 jobs dur­ing the next decade should Medi­care re­duce hos­pi­tal rates by 2%.

The over­all pos­i­tive health­care job growth masks rare con­trac­tions in hos­pi­tal em­ploy­ment. Hos­pi­tal lay­offs and hir­ing freezes that fol­lowed the sud­den fi­nan­cial strain of the credit cri­sis have per­sisted as the sec­tor grap­ples with the weak re­cov­ery and a drop in Medi­care rates. In the past decade, monthly hos­pi­tal em­ploy­ment fig­ures have de­clined on just 11 oc­ca­sions, fed­eral jobs fig­ures show. Of those, nine oc­curred af­ter the Great Re­ces­sion be­gan and have con­tin­ued through this year.

Other data high­light a squeeze on hos­pi­tal wages and ben­e­fits, not un­like the rest of the econ­omy. By one mea­sure, hos­pi­tal spend­ing on wages and ben­e­fits slowed dur­ing the worst of the re­ces­sion and nearly stalled as the re­cov­ery fal­tered. An­other snapshot found hos­pi­tals markedly slowed spend­ing on wages and ben­e­fits for the sec­ond straight year in fis­cal 2010.

That does not mean hos­pi­tal mar­gins have stum­bled dur­ing the down­turn. The pay­roll cuts and frozen wages have con­trib­uted to ag­gres­sive cost cut­ting that an­a­lysts credit for healthy op­er­at­ing per­for­mance among stronger hos­pi­tals and health sys­tems.

The Mil­ford (Mass.) Re­gional Med­i­cal Cen­ter moved to curb la­bor spend­ing as a grow­ing num­ber of pa­tients strug­gled with med­i­cal bills or de­layed imag­ing and elec­tive pro­ce­dures in re­cent years, said of­fi­cials with the 121-bed hos­pi­tal.

Fran­cis Saba, CEO of Mil­ford Re­gional, said the fi­nan­cial pres­sure prompted ex­ec­u­tives to speed up job cuts that would have other­wise oc­curred through at­tri­tion. Nine­teen part-time li­censed prac­ti­cal nurses were laid off roughly one year ago. The cuts were part of the hospi-

AP PHOTO

Obama’s speech last week sig­naled that cuts to Med­i­caid and Medi­care may be ahead.

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