Increasing numbers of hospitals nationwide are instituting mass layoffs as they try to stay solvent in what some administrators and consultants have called the most challenging time for the industry in at least 40 years.
Some smaller hospitals have even laid off employed doctors or slashed physician pay, and consultants warn that as the economy gets worse, more hospitals will likely follow.
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Hospital administrators say a combination of factors resulting from the recession have caused an economic meltdown unlike any they've seen.
Layoffs throughout the overall business community have swelled the number of uninsured patients at the same time that cash-strapped states have slashed Medicare and Medicaid reimbursements. A bear market has resulted in investment losses straining hospital endowments and reserves. Donations are down. And skittish banks have made it more difficult or more expensive to borrow or have frozen credit altogether.
Beyond layoffs, hospital administrators have instituted pay cuts, cut administrative personnel and costs, slowed construction and delayed new equipment purchases. Some have closed money-losing departments. Others have shut their doors.
Hospitals have said they are trying to avoid laying off doctors or other clinicians by trying to work more closely with physicians and boost traffic. But consultants and recruiters wonder how long this can last.
"As hospitals get less patients, they have less need for physician services. I don't see how hospitals in these cases cannot cut back on physicians," said Rick Langosch, senior vice president and chief financial officer of The Coker Group, a consulting firm for hospitals and medical practices.
Some hospitals have already begun looking at physicians as a way to cut costs.
Faced with a $40 million deficit, Long Island College Hospital in Brooklyn, N.Y., laid off 100 employees last fall. The state denied the hospital's request to close the obstetrics and pediatrics departments, which would have brought 75 more layoffs, including six doctors. Beaumont Hospitals in suburban Detroit said in November 2008 that it was asking its employed doctors to take a 10% pay cut.
http://www.ama-assn.org/amednews/2009/01/26/bisb0126.htm
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