If you’re waking up concerned about whether you will keep your job tomorrow and be able to take care of your family financially, you join thousands of fellow workers across America in one surprising industry.
No, we don’t mean government, but the healthcare industry. Indeed, federal workers nationwide have been furloughed going on two weeks now, but apparently, health care providers (mostly at hospitals) have announced more layoffs than any other industry recently. Hospitals are starting to trim their rolls by thousands of workers due to falling insurance payments and patients’ visits causing losses in revenue and greater expenses. This is concerning as the health care industry has been a stable source of employment for the shaky job market during this weak economic recovery.
"While the rest of the U.S. economy is stabilizing or improving, health care is entering into a recession," says John Howser, assistant vice chancellor of Vanderbilt University Medical Center.
Health care providers announced more layoffs than any other industry last month — 8,128 — mostly because of reductions by hospitals, according to outplacement firm Challenger, Gray and Christmas. So far this year, the health care sector has announced 41,085 layoffs, the third-most behind financial and industrial companies.
Total private hospital employment is still up by 36,000 over the past 12 months, but it's down by 8,000 since April and more staff reductions are expected into next year.
"This is a challenging time for the health care industry," says Jim Terwilliger, president of two of Indiana health's hospitals. "The pace of change is far greater than anytime in recent history."
The reason is even more surprising: ObamaCare. The health care law has reduced Medicaid payments to certain hospitals including those that provide lower-quality service or have high rates of readmission. ObamaCare penalizes hospitals that treat repeat offenders – so to speak- or patients who are readmitted within 30 days of being discharged. This one percent of health care consumers apparently account for over 20 percent of U.S. healthcare expenditures.
Obamacare is not the only reason hospitals are getting skittish, sequestration and other reductions in federal funding play a role. And, as aging Baby Boomers start using Medicare to pay for the healthcare needs, hospitals will face greater demand on services and lower insurance reimbursements.
Some experts think that the wave of newly covered Americans under ObamaCare will spark big business for hospitals and will drive new hiring to manage the new patient volume. However, if these new patients are Medicaid and Medicare users, hospitals may find themselves giving out more in services than they get back in revenue. Sounds like a diagnosis for financial breakdown.