Health Care Industry Could Lose its Financial Stability, Experts Say
The health industry has been a reliable engine of job growth for years, but analysts warn that looming federal cuts may mean those days are over, the New York Times reports.
During the recession, the overall U.S. economy lost about 7.5 million jobs but the health industry posted 430,000 payroll additions. In July alone, health care accounted for 31,000 of the 117,000 jobs added to the U.S. economy.
However, industry experts say that pending reimbursement cuts threaten the health sector's financial underpinnings, changing expectations about job creation.
Daniel Sisto, the president of the Healthcare Association of New York, said, "It's not realistic to believe that we're going to continue to generate job growth when you're speaking about Medicare and Medicaid reductions in the hundreds of billions of dollars over the next few years."
According to a Moody's Investors Service analyst, 37 states have cut hospital reimbursement in next year's budget, and more cuts are expected. At the same time, nursing home operators will face an 11% Medicare payment cut in October, as other parts of the health sector brace for deeper pay cuts associated with health reform and efforts to control the federal deficit.
Meanwhile, other health organizations are hiring at a slower rate. A survey by the Conference Board, a business research group, found that job postings for health providers and technicians decreased by 61,200 listings in July. Hospitals also are building new facilities at a slower pace, according to the Times, which notes that hospitals' volume of tax-exempt debt in the first half of 2011 has decreased by about 50% compared to the year prior.
Even hospitals that continue to build are looking to boost efficiency and trim expenses to compensate for upfront outlays. For example, the University of Michigan Health System, which recently added jobs to staff its new children's and women's hospitals, plans to shrink its workforce across the coming years. The system's CEO notes that, although demand for services continues to rise, new regulations are pushing him to offer lower-cost care with a smaller staff (Abelson/Thomas, New York Times, 8/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.