By Rachael Levy Luke Bolek once worked as a doctor at a Florida hospital, where he was recruited in 2007 to take part in a new $10 million nuclear medicine department. By late 2012, Bolek and his department colleagues had been laid off along with 400 other employees as the hospital downsized in the wake of the 2010 Patient Protection and Affordable Care Act, also known as Obamacare.
“With the people left over, they started cutting their salaries,” Bolek said. “They cut out food at the cafeteria. They started slashing everything.” Bolek, 39, has been flying between temporary hospital jobs in Cleveland, Ohio, and Melbourne, Florida, ever since, staying in hotels in both cities.
The doctor’s story isn’t unique. Hospitals shed some 4,000 jobs in the last year, the worst year-over-year loss since 1995, according to the Bureau of Labor Statistics. The shift is part of a long-term trend in health care, where jobs are growing much more slowly than in 2008, before the financial crisis and when job growth peaked. In April, health care added just 1.4 percent more jobs over the last year, less than half the rate in 2008.
Hospitals, in particular, are in flux. The sluggish economic recovery and a slew of policy changes, including Obamacare, have brought down hospital revenue and slowed hiring, experts say.
Source: Bureau of Labor Statistics. Created by Rachael Levy.
Future revenue streams have been uncertain ever since the Affordable Care Act passed in 2010. Reimbursements for Medicare, the U.S. health plan for the elderly, are being reduced to help cover the insurance expansion under the ACA.
Other Medicare cuts unrelated to the ACA have also since come into effect. They include reduced reimbursements for Medicare patients with bad debt, cuts during last year’s sequester and reduced funding for hospitals serving low-income communities, said Caroline Steinberg, vice president for trends analysis at the American Hospital Association.
“Medicare is the big gorilla that pays most of the hospital bills,” Steinberg said, noting that Medicare makes up 42 percent of hospital funding. “When Medicare makes a change, it has a huge impact on hospitals.”
Meantime, more people are being added to Medicaid, the U.S.’ health care program for the poor, which generally pays the worst for care. Hospitals are also avoiding recently-implemented fines by cutting back on unnecessary profit-bearing procedures — an efficiency gain for patients but a revenue loss for hospitals.
To top it off, the slow economic recovery has translated into fewer people committing to non-urgent medical procedures.
“If you have any uncertainty about your job security, that’s probably not going to be the time you go to get your knee replaced,” said Joanne Spetz, a health care economics professor at University of California, San Francisco.
A lack of paying patients has been particularly acute ever since the 2008 crisis, said Henry Nicholas, president of the National Union of Hospital and Health Care Employees. “It’s an empty bed problem,” Nicholas said, noting hundreds of hospital workers in Philadelphia, where he is based, had been laid off over the last year. “As a result, they don’t need the workers.”
In Massachusetts, whose 2006 health care overhaul became the model for the ACA, hospital growth has slowed since 2010. The state’s hospital staffs were growing by 3 percent in 2006, but grew at about half that rate as of March, the most recent month with data. In February last year, the state lost 1,000 hospital jobs, the first layoffs in 12 years, according to the Bureau of Labor Statistics.
Hospitals in Massachusetts have been facing some of the same problems as hospitals nationwide, including cuts to federal health insurance programs.
Source: Bureau of Labor Statistics. Created by Rachael Levy.
But some find hospitals’ excuses suspect. In Massachusetts, 40 hospitals have been storing undisclosed amounts of money in offshore accounts, a union report found.
Some hospitals establish offshore entities for self-insurance purposes, traditionally in the Cayman Islands or Bermuda, which is legal, the Massachusetts Hospital Association said in a statement.
The union is pushing a ballot measure that would make the amounts held in those accounts public.
Meantime, hourly hospital earnings across the country have been on the wane since the recession. Wages grew at only 1.5 percent over the last year, compared to about 4 percent in 2008.
“If they’re laying people off, it makes it easier to not give the nurse a raise,” said J.D. Kleinke, a health economist who has written several books on the U.S. health care system. And when hospitals do hire, they tend to hire lower paid workers with fewer credentials to do work once done by higher-paid employees, Kleinke said. Take a $25-per-hour nurse.
“Now they’ve figured out how to have a nurse’s aid [do the work] at $16-per-hour,” Kleinke said. “Everything is moving to a lower credential level.” To be sure, some of the causes precede Obamacare. Insurance companies have been putting pressure on hospitals to lower costs for several years.
And not all hospital jobs have been as affected. Nurses and doctors are far better off than lower-credentialed staff and administrative workers, who can be replaced by computers, economists say. Since more people will have health insurance under Obamacare, hospitals are bulking up on more primary care physicians and fewer specialists, like Bolek, the nuclear medicine doctor who lost his job. Experienced nurses should be in high demand in the coming years.
And Obamacare, in the short run, may create some hospital jobs as more people access care. More bill coders and administrators will be needed to funnel the paperwork. But in the long-term, many of these workers will likely be replaced by technology, economists say.
“The cuts are going to be higher than the gains that hospitals get from expanded [insurance] coverage,” Steinberg said. “And that will lead to cutbacks.”