Hospitals, Feeling the Squeeze, Lay Off Workers

For years hospitals have been the big man on the health care campus, elbowing health insurers out of the way thanks to a cascade of mergers and acquisitions. Now, they’re downsizing and laying workers off, according to STAT.

Some of that has to do with bad decisions. Catholic Health Initiatives, one of the country’s largest not-for profit hospital systems, is laying off about 900 workers It lost a lot of money on its in-house insurance business. MD Anderson, whose CEO Ronald DePinho stepped down earlier this year, has been hit by the cost of launching a new electronic health records system.

Hospitals that have been expanding and consolidating also apparently did not recon with a looming demographic and systemic problem. About 10,000 people per day graduate into baby boomerism and many of them will switch from employer-sponsored health care to Medicare, which usually doesn’t pay hospitals as well as private insurers. Hospitals, for the most part, have had the upper hand in dealing with commercial plans. The government’s a different animal.  

Late last year, Mayo Clinic’s chief executive told employees that Mayo “would try to relieve the financial squeeze by giving preference to privately insured patients over those with Medicare and Medicaid. That policy would only apply to patients seeking care for similar conditions at the same time, but it drew sharp criticism. Nonetheless, Mayo chief executive John Noseworthy said the reimbursement problems facing hospitals must be openly discussed.”

Noseworthy said in a statement: “Changing demographics, aging of Americans, and budgetary pressures at state and federal governments pose challenges to the fiscal sustainability in health care today. While these discussions are uncomfortable, they are critical for us to be able to meet the needs of all of our patients.”

Source: STAT