How jobs bill affects healthcare
Despite growth, industry feeling the strain
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-
Obama’s speech last week signaled that cuts to Medicaid and Medicare may be ahead.