September Layoffs Largely Concentrated in Healthcare

The once recession-proof healthcare industry took a large hit in September, reporting more layoffs than any other industry for the month.

Hospital layoffs

Healthcare providers let go more than 8,000 employees, including administrative staff as well as doctors and nurses, in an ongoing effort to reduce costs. Some notable reductions are Vanderbilt University Medical Center’s 1,000-employee cut and Cleveland Clinic’s 3,000-employee buyout plan. Reductions are projected to continue into next year, cutting into the past year’s gains in private hospital employment.

The layoffs are a response to a variety of funding cuts and changing hospital conditions, including new reductions established by the Affordable Care Act. Medicare and Medicaid reimbursements in particular have fallen sharply due to sequestration and additional penalties associated with the Hospital Readmissions Reduction Program, which cuts reimbursement to hospitals with excessive readmissions for applicable conditions. Other factors include:

  • Research funding from the National Institutes of Health was cut five percent due to sequestration;
  • Increasing numbers of patients are aging into Medicare, which reimburses at lower rates than private insurance;
  • Despite the ACA’s expansion of Medicaid, 26 states have chosen not to expand the program and accept greater funding (Vanderbilt cites this as a primary cause of their cuts);
  • Private insurance policies are paying out lower amounts, passing costs on to patients with higher deductibles and co-insurance;
  • Inpatient stays have shortened since the recession began, decreasing in length by four percent from 2007-2011.

Healthcare consultants, however, point out that hospital layoffs are a shortsighted solution that many facilities will have to reverse as more patients take advantage of their access to affordable healthcare and seek treatment they may have otherwise eschewed.

There are alternative solutions for facilities looking to shore up their cash flow. Medical receivables factoring gives hospitals immediate access to cash that they can use to meet their expenses without cutting employees they will likely need to call back in the next few months. PRN Funding has more than a decade of experience in the healthcare industry and can help meet the unique needs of providers. Apply today to learn more and get the cash ball rolling.

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