ospitals nationwide are cutting jobs amid a whirlwind of financial pressures — and sharp fears about the direction Republicans will steer health care policy.

Just in the past month, hospitals in 10 states, from Kentucky to Minnesota to New Mexico, have made public plans for staff reductions. In the largest such announcement, a prominent Boston hospital — Brigham and Women’s, which is affiliated with Harvard — last week said it will offer voluntary buyouts to 1,600 workers and may lay off staff later in the year.

Many other providers are eyeing cuts to clinical services, including labor and delivery, substance abuse counseling, and psychiatric care. Children’s Hospital Colorado, for instance, is weighing cuts to preteen psychiatric programs and telehealth services in the face of state budget reductions.  Methodist Hospital in Henderson, Ky., announced 61 layoffs earlier this month and closed a pediatric inpatient unit. Other hospitals have warned they may shut down entirely as revenue shrinks and costs rise.


So far, many “hospitals have been able to make cuts using a scalpel instead of an ax,” said John Palmer, spokesman for the Ohio Hospital Association. “But they’re running out of options.”

The personnel cuts represent just a sliver of the nation’s $3.4 trillion health care industry. But the financial problems they reflect —  flat reimbursements and escalating costs for salaries, medicines, and supplies — are affecting all kinds of organizations, from public hospitals serving poor urban populations to tiny rural providers to major academic medical centers.

Among recent job reductions:

  •  In Silver City, N.M., the small Gila Regional Medical Center sliced more than a dozen jobs from the payroll, including several nursing administrators. The hospital no longer employs a chief operating officer.
  • Hennepin County Medical Center, a public hospital in Minneapolis, is cutting about 130 jobs, or 2 percent its full-time staff. And that’s just the start: Administrators have said they may need to double the job reductions by the end the year. The hospital lost about $11 million in 2016, in part because it serves a large number of uninsured and low-income patients.
  • MemorialCare Health System in Long Beach, Calif., laid off 131 employees earlier this year, citing an increase in Medicare and Medicaid patients and declining reimbursements from those programs.

At Brigham and Women’s Hospital, officials said those same forces have whittled away at its margins over time, leaving its budget out of balance.  “We are at a point where we also need to right-size our workforce,” the hospital said in a statement. “… We owe it to our current patients — and those who will need our care in the future— to tackle the unprecedented financial challenges we are facing.”

Those challenges are intensifying amid the debate over health care reform in Washington.

Republicans are working off a draft bill that could cause 24 million people to lose insurance coverage over the next decade, according to the Congressional Budget Office. More recent amendments could let states opt out of federal mandates that insurers cover a defined package of benefits, including many services delivered by hospitals.


Sign up for our hospitals newsletter, On Call

Please enter a valid email address.

That could saddle hospitals with millions more patients who cannot afford to pay their bills. The industry’s major lobbying arms, the American Hospital Association and the American Medical Association, are speaking out against the proposal.

Meanwhile, hospitals are taking stock, and they do not like what they see.

Catholic Health Initiatives, one of the nation’s largest nonprofit providers, has said it will cut nearly 900 jobs through layoffs and buyouts. The cuts include 620 jobs at its hospitals in Texas and another 250 in Kentucky.

Another large hospital in Texas, MD Anderson Cancer Center, laid off about 800 employees in January after losing $267 million in its last fiscal year.

The cutbacks at those and other hospitals result from a variety of pressures. Some have contributed to their own problems with bad business decisions. Catholic Health Initiatives, for instance, has lost money on its in-house insurance business. MD Anderson cited the high cost of rolling out a new electronic health records system, among other factors. (Its chief executive, Ronald DePinho, stepped down earlier this year.)

The problems also vary by state, depending on funding for public programs and other factors. In Ohio, no layoffs have been announced this year, but nearly a quarter of the state’s hospitals are operating in the red or on a margin of less than 2 percent, according the Ohio Hospital Association.

Despite regional differences, hospitals do face some common challenges.

A rapidly aging population means more demand for their services. But older patients often get coverage through Medicare, which generally pays hospitals less than private insurers. So the rapid increase in those patients — an estimated 10,000 baby boomers turn 65 every day — means that hospitals are making less money on that population.

Fitch Ratings cited that problem in issuing a negative financial outlook for hospitals in 2017. The company said its pessimism was reinforced by the Republican plan to overhaul Obamacare, which includes a $880 billion cut in Medicaid funding.

“Hospitals would face considerable growth in uncompensated care, which would stress top-line revenue growth and bottom-line profitability,” Fitch wrote in a report published in March. “Furthermore, hospital providers in states that expanded Medicaid under the [Affordable Care Act] are at particular risk.”

In Minnesota, one of those expansion states, the chief executive of Mayo Clinic told employees late last year that the massive health system would try to relieve the financial squeeze by giving preference to privately insured patients over those with Medicare and Medicaid. That policy would only apply to patients seeking care for similar conditions at the same time, but it drew sharp criticism.

Nonetheless, Mayo chief executive John Noseworthy said the reimbursement problems facing hospitals must be openly discussed.

“Changing demographics, aging of Americans, and budgetary pressures at state and federal governments pose challenges to the fiscal sustainability in health care today,” he said in a statement. “While these discussions are uncomfortable, they are critical for us to be able to meet the needs of all of our patients.”

Clarification: This story has been updated from a prior version to reflect that MD announced plans to lay off about 800 employees in January.

Leave a Comment

Please enter your name.
Please enter a comment.

  • The reality is that since Obamacare, hospital and healthcare has becoman industry run by big corporations and CEO with tactics that in the name of “quality” to squeeze private physicians out of practice and cut the cost by cutting the care of patients. Hospitals before Obamacare where responsible for taking care of cleanliness of place and higher ancillary staff such as nursing. After Obamacare they have hired their own physicians and now they micromanage the care thru them not in the interest of patients but in the interest of making more money off of them. At the end result for them is to make more money and patients suffer. Obamacare pays big organizations multiple times private physicians and up till now they had tax payers money to thrash around. Now they are scared that with Obamacare going away the money that Obama pumped into them to comply with disaster of a plan he had in effect, they have to actually make what they spend. The only way to cut the cost is to get rid of Obamacare and let private physicians care for their patients. Of course lot of Democrats dont like this because their beloved CEOs will have no money to spend on them.
    Ok sorry that I didnt talk about the millions that Democrats (with the help of hospital lobbyist) claim will loose insurance. Because that is nothing except political misinformation. Deductibles of 5-6K per year is what most people under Obamacare are never need or able to pay. So it is and has been a joke from the beginning.
    Repeal Obamacare and make hospitals safe for patients again. We dont need the CEOs to run our healthcare decisions.

  • The hospitals should cut administrative salaries especially CEO salaries as well as get rid of bonuses for them too. They add.nothing to the bottom line or are in any way productive.

  • How do you reconcile articles like this with the information about massive over billing, over testing and treatment, high executive pay and wildly unequal charges laid out so forcefully in the new book, “American Pain?”

  • Same old same old blame game/ forces beyond control of hospitals causing cuts. Hasn’t happened yet but all jumping on blame wagon to ensure profits and cut employee wages or jobs!

  • “A rapidly aging population means more demand for their services. But older patients often get coverage through Medicare, which generally pays hospitals less than private insurers. So the rapid increase in those patients — an estimated 10,000 baby boomers turn 65 every day — means that hospitals are making less money on that population.”

    HHS Secretary Tom Price advocates “balance billing” of Medicare patients.


  • So let me understand–the ACA increased coverage and provided a Federal subsidy to help pay for such coverage. Yet, that isn’t enough because you write about hospital losses and resulting layoffs. Repeal and replace efforts will now lead to worse results.

    I am sure you are aware that administrators, physicians and nurses are paid significant sums to do their jobs. Many CEOs are paid in the millions, physicians in the multiple hundreds of thousands and nurses average close to a hundred thousand per year. Is there no accountability here?

    Money flowed in and wages went up and more were hired. Now the belt tightening needs to happen. Why are you writing like the house is on fire? Probably because you know providers will deny services rather than take a pay cut. That is the real shamehere.

    • See Elisabeth Rosenthal’s excellent new book “An American Sickness.” Reviewed it on my KHIT.org blog.

    • I don’t know where you are pulling your information from, but it is wildly inaccurate. Most nurses do not make anywhere near 100k, maybe nurse practitioners?

      Physicians making “hundreds of thousands” is an intersting statement when you take into account the debt that it takes to complete medical school, the low pay/long hours during residency, and the toll that it takes to pay off the “hundreds of thousands” in debt when doctors make an actual salary after 11 or more years of education/training.

      So while your thoughts sound great by providing scapegoats and allowing you to point a finger, they seem misinformed at best.

    • For Chris N:
      indicate averages, which can change depending on location and experience. Yes, NP’s make that but RN’s can still get close to that amount, again it depends.

      Have you read mortarboard millionaires? Even FP’s, etc. are slated to be millionaires at the end, and that can’t be said of regular business grads. Not all of them are making 6 figures paper pushing at hospitals. Some of it is doctors who need to be financially disciplined.


    • Really? Nurses average close to 100K? I work full time full time plus overtime all last year. Overtime because there aren’t enough nurses to care for the patients. I made 54K, including the measly $1,000 bonus that the organization gave to all nurses for working hundreds of extra hours. I must be working in the wrong place because I don’t know any nurses where I work, who average $100K. You must be referring to specialized travel nurses who get paid more to help hospitals that have a hard time filling positions. And you can bet that they put in extra time too. I can promise you, that working in a hospital, whether as a nurse or hospitalist, is in no way, a cush job. I worked for an IT consulting company before I took off time to raise my kids. I became a RN at 47. This job, my friend, is THE HARDEST, job I’ve ever had. I work hard every minute that I’m on the floor, 12 hours straight, no lunch, on my feet… I deserve every frigging penny I make as so do my teammates. Thank you.

  • I support the Affordable Health Act and sorely wish the GOP would get behind the efforts to improve rather than the ill-advised and purely political agenda to repeal and replace . . . for America’s sake.

    • More lawyers means worse for the economy and health care. Lawyers are doing nothing but pure business intentions and personal gains to fill their pockets. Physicians on other side do get paid fair amount but they are actually doing the best for the patient. Physicians are now over testing and practicing defensive medicine, which drives up the cost of the services provided and patient along with the hospital bears that cost on them. So no lawyers should be regulated when involved in current health care system.

Sign up for our Morning Rounds newsletter

Your daily dose of what’s new in health and medicine.