Layoffs Prove Hospitals Aren't Recession-Proof

by Mark Friedman  on Monday, Mar. 2, 2009 12:00 am  

Some Arkansas hospitals are slashing employees' pay, freezing benefits or laying off workers, shattering the notion that the health care industry is recession-proof.

In February alone:

· Washington Regional in Fayetteville cut all employees' pay by 2.9 percent.

· The University of Arkansas for Medical Sciences in Little Rock, which in January opened a new $200 million facility, instituted a "hiring review" and will delay hiring for open "non-critical" positions for 90 days.

· St. Vincent Health System of Little Rock, which this year will complete a $47 million expansion, laid off 15 people and eliminated 35 positions through attrition, its second round of layoffs in seven months.

· Saline Memorial Hospital in Benton trimmed 52 positions through attrition and laid off eight people.

Hospitals that were already struggling with inadequate reimbursement rates for a growing number of Medicare and Medicaid patients are now dealing with a new problem: Patients are staying away.

The American Hospital Association reported in November that of the 736 hospitals surveyed, more than 30 percent reported a moderate to significant drop in patients seeking elective procedures, and nearly 40 percent of hospitals reported a drop in admissions overall.

Most of the jobs being eliminated are for unskilled positions or support staff. And most hospitals are holding onto their nurses, according to Paul Cunningham, senior vice president of the Arkansas Hospital Association. In fact, St. Vincent is still looking to hire about 30 nurses, CEO Peter Banko said last week.

Hospitals are "trying as much as possible to avoid layoffs," Cunningham said. "Where the layoffs have occurred, they're probably at a minimum right now. That's certainly not to say they couldn't get worse if the economy gets worse."

Rick Langosch, senior vice president of the Coker Group, a health care consulting firm in Alpharetta, Ga., didn't sound encouraging.

"I've been a CEO or CFO of hospitals for about 30 years," he said. "This is as bad as I've seen it, and I don't think I've heard from anybody expecting this to turn around in the foreseeable future.

"We're seeing some trends that are going to remain for a long, long time." Hospital administrators also are uncertain what relief the $787 billion American Recovery & Reinvestment Act will bring.



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