Hospital Layoffs Creep Back into the Headlines

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

• Downsized Jackson Health System will mean pain for all
• Seton eliminating more than 150 positions, official says
• Mercy Hospital Announces Dozens Of Layoffs
• Jewish Hospital parent to cut 500 jobs
• Lawton hospital lays off 56, including COO
• Hospital will lay off 50, closes skilled nursing unit
• MS hospital announces staff changes at River Oaks Hospital
• Fremont-Rideout to cut 185 jobs in consolidation
• EMMC lays off nearly 50 workers

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."

These layoffs should be put in their proper context. While certainly painful for the people who lose their jobs, the healthcare sector remains one of the most vibrant job growth areas of the economy. Hospitals created 33,400 new jobs in 2009, and skilled clinicians are still in high demand in most areas of the nation.

The overall healthcare sector—which includes everything from hospitals to outpatient surgery centers to podiatrists' offices—has created 631,000 jobs since the recession began in December 2007. In that same time frame, the number of jobless people in the nation has risen from 7.7 million to 15.3 million, BLS figures showed.

Cherner says he is "still bullish" that hospital hiring in 2010 will be a lot stronger than it was in 2009. "Certainly, once we get some clarity around healthcare reform and people start to make sense of it, that we will see a bit more stability," he says.

Judging by the BLS data, this recession has changed the way that hospitals regard staffing. Because labor costs are the biggest driver in hospital costs, hospitals will contain these costs by continuously examining their staffing needs. Even after the recession, we will continue to see these staffing adjustments–some big, most small—in the months and years ahead. Employees with adaptable skills will transition into new roles within their hospitals. Employees without those skills will be left behind.

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