Hospitals tend to be among the largest employers in their communities — which means that any individual decision to lay off staff can have an outsized local impact. And taken together, a dozen recent announcements seem to paint an especially dire picture for hospitals (and their communities) around the nation.
For example, NorthShore in Illinois says it will lay off 1% of its workforce. The staffing cuts “ensure NorthShore remains well positioned to deal with the unprecedented changes brought on by the Affordable Care Act,” according to a memo from the health system’s chief human resources executive.
And California’s John Muir Health is offering staff voluntary buyouts ahead of ACA implementation. “We’re being paid less, and we either stick our head in the sand or make changes for the future so patients can continue to access us for their care,” according to John Muir spokesperson Ben Drew.
When Obamacare was being debated in Congress, its opponents tried to tar it with a deadly label: “the job-killing health law.” So is the ACA finally living down to its sobriquet?
Not exactly. While the recent news makes for provocative headlines, the devil’s in the details — and the financial reports.
A Closer Look at Industry Pressures
It’s clear that something is shifting in the hospital market. After years of employment growth, hospitals’ hiring patterns have largely leveled off. Collectively, organizations shed 9,000 jobs in May — the worst single month for the hospital sector in a decade.
Some of those decisions reflect industry-wide belt-tightening, as Medicare moves to rein in health spending by moving away from fee-for-service reimbursement and penalizing hospitals that perform poorly on certain quality measures.
And uncertainty around ACA implementation is trickling down to hospital staffing decisions, economists told me. Many organizations still aren’t sure how the pending wave of newly insured patients will affect their profit margins, given that many of these individuals may be sicker and will be covered by Medicaid, which reimburses hospitals at lower rates than Medicare and private payers.
But the ACA is just one factor affecting hospital finances, and its impact isn’t consistently negative for providers. In some cases, hospitals have even staffed up in hopes of capturing new patient volumes from the ACA’s insurance marketplaces or receiving added revenue through the law’s accountable care organizations and other pilots.
And as I’ve previously detailed, when accounting for all of the law’s disparate effects — the flow of new dollars into health care sector, which leads to direct and indirect hiring; the financial relief for millions of low-income families, who can decouple their employment decisions from health insurance — some economists argue that the ACA is a job-boosting health law.
Law May Be Providing Cover
However, another set of headlines suggest a different story could be written. Some hospitals are laying off staff — or even closing their doors — because they say their states aren’t doing enough toimplement the Affordable Care Act.
The Huffington Post‘s Jeffrey Young reports on one North Carolina hospital that recently shuttered because the state refused to opt into the ACA’s Medicaid expansion; according to Vidant Pungo Hospital officials, expanding coverage would have cut their uncompensated care bill and boosted revenues.
But looking at the health system’s balance sheet reveals that Vidant Pungo’s financial concerns went well beyond the ACA; for example, the aging facility likely needed a capital infusion to renovate its aging physical plant. Meanwhile, some of the hospitals that are blaming the ACA for their recent staffing decisions have had longstanding financial challenges. (Covenant in Texas, for example, shed hundreds of workers in 2008 and 2009, well before the ACA was even being debated in Congress.)
Since its passage four years ago, Obamacare has been many things to many groups: a rallying point for liberals, a stalking point for conservatives, a transformative package of reforms for the health care industry.
This time around, Obamacare may be playing a new role: convenient scapegoat for hospitals’ relatively normal staffing decisions.