Is Obamacare Responsible for Hospital Staff Layoffs?

Hospital systems nationwide have been in the news lately for projected staff layoffs and other budget cuts. Just this week Cleveland Clinic, Cleveland’s largest employer, announced a $330 million annual budget cut without specifying how much of those cuts would come from staff reduction. Other systems have specifically announced layoffs and staff voluntary buyouts.

A scan of the headlines suggests that the Affordable Care Act is the culprit behind these healthcare staffing changes. But is that really the case?

Some recent headlines:
• Ohio Clinic touted by Obama slashes budget due to ObamaCare (Fox News)
• Citing Obamacare, Cleveland Clinic to cut $300M, Warns of Layoff (US News & World Report)
• Hospital Finds Obamacare Harmful to Its Health (
• Atlantic General Hospital Hires During ‘Obamacare’ Scare (WBOC TV 16)
Emory Healthcare to cut 100 jobs party because of Obamacare (WSB-TV)

Quotes regarding the Cleveland Clinic’s budget reduction came from both an unnamed spokeswoman and the Executive Director of Corporate Communications for the Cleveland Clinic Foundation, though the article does not specifically attribute the ACA connection to either source. In the Emory news report, however, an Emory spokesman does acknowledge that the ACA “played a role in the layoffs”.

While most of the mainstream media is running with the ACA-layoff connection, others are digging deeper to discover ongoing root causes that have little or nothing to do with the ACA. Dan Diamond of California Healthline’s Road to Reform reports that the ACA is merely one factor in hospital staffing decisions, and makes the argument that the ACA is actually poised to increase job growth.

Other factors involved in hospital layoffs and hiring freezes include changes in Medicare reimbursement policy; budget reallocation decisions that affect specific departments (as cited in the Emory reduction of inpatient psychiatric staff); and continuing financial challenges.

The ACA’s effect, meanwhile, appears to be more complex than headlines may imply. There is a great deal of uncertainty surrounding implementation of the ACA’s key provisions, and concern that expanded Medicaid coverage will mean lower reimbursements for care. Some hospitals are actually reporting an increase in hiring to provide care for a higher number of patients who are expected to utilize the system once health plans are made available to them.

Another issue reported in Huffington Post is that hospitals in some states are being forced to close because the state is not implementing ACA provisions, namely Medicaid expansion. The ACA reduces funding to hospitals serving large populations of uninsured patients, expanding Medicaid with the savings; however, if state government does not accept the resulting federal Medicaid funding then those hospitals will not be able to recoup the lost dollars.

While the debate over the Affordable Care Act continues to rage in Congress, there will undoubtedly be more headlines attributing hospital cuts to the law. There is certainly a degree of truth to many of these claims, but given the contentious nature of the ACA it is especially important to look beyond the headlines and carefully consider all the facts involved.

As the full effects of the Affordable Care Act remain to be seen, make sure your healthcare staffing agency is prepared. PRN Funding’s healthcare staffing factoring program can provide you immediate cash to expand your workforce or weather staffing gaps in your area. Learn more and contact us today to get started.